Mortgage rates in the US surged the most in more than three decades, ratcheting up pressure on would-be homebuyers and cooling the housing market.
The average for a 30-year loan jumped to 5.78%, up from 5.23% last week, Freddie Mac said in a statement Thursday.
That was the largest one-week increase since 1987.
The pandemic-induced housing frenzy has started slow from the breakneck pace of the last two years spurred in part by actions by the Federal Reserve to tamp down inflation
On Wednesday, the US central bank boosted its benchmark rate by three-quarters of a percentage point
the biggest increase since 1994, and officials signaled more hikes could be on the way.
“These higher rates are the result of a shift in expectations about inflation and the course of monetary policy,” Freddie Mac’s Chief Economist Sam Khater said.
“Higher mortgage rates will lead to moderation from the blistering pace of housing activity that
we have experienced coming out of the pandemic, ultimately resulting in a more balanced housing market.”
The new average is the highest level since 2008 and is almost double the 2.93% rate on 30-year mortgages last year at this time.
An index that tracks homebuilders dropped Thursday morning after the mortgage data was released.