• Wed. Sep 21st, 2022

US mortgage rates top 6% on US CPI report for August

ByElla E. Kidwell

Sep 18, 2022

In the week ending September 15, mortgage rates crossed the 6% mark for the first time since 2008. 30-year fixed rates rose 13 basis points to 6.02%. The previous week, rates jumped 23 basis points to 5.89%. After the 13 basis point hike, rates rose 103 basis points from a low of 4.99% on Aug. 3.

Year over year, 30-year fixed rates rose 316 basis points to reach a new high in 2022.

Economic data of the week

On Tuesday, the US CPI report for August was the main driver of rising mortgage rates. Better than expected CPI numbers pushed US Treasury yields and mortgage rates higher.

Market bets on a percentage point rate hike surfaced in response to the report, pushing mortgage rates past six percent.

Freddie Mac Pricing

Average weekly rates for new mortgages, as of September 15, 2022, were quoted by Freddie Mac be:

  • 30-year fixed rates rose 13 basis points to 6.02%. At this time last year, rates stood at 2.86%. The average fee is 0.8 points.
  • 15-year fixed rates rose five basis points to 5.21%. Rates rose 309 basis points from 2.12% a year ago. The average fee is 0.9 points.
  • 5-year fixed rates jumped 29 basis points to 4.93%. Rates rose 242 basis points from 2.51% a year ago. The average fee is 0.2 point.

According to Freddie Mac,

  • Better-than-expected US inflation figures pushed mortgage rates to their highest level since 2008.
  • While rates will continue to weigh on demand and house prices, inventories remain low.
  • Low inventory levels should shield the housing sector from a major price correction.

Mortgage Bankers Association Rates

For the week ending September 9, 2022, the rates were:

  • Average 30-year interest rates fixed with conforming loan balances fell from 5.94% to 6.01%. Points increased from 0.79 to 0.76 (origination fee included) for 80% LTV loans.
  • Average FHA-backed 30-year fixed mortgage rates fell from 5.61% to 5.71%. Points increased from 1.06 to 1.12 (origination fee included) for 80% LTV loans.
  • The 30-year average rates for jumbo loan balances fell from 5.46% to 5.56%. Points increased from 0.40 to 0.39 (origination fee included) for 80% LTV loans.

Weekly figures released by the Mortgage Bankers Association showed the Composite Market Index, a measure of mortgage application volume, fell 1.2%. The Refinance Index fell 4% and was 83% lower than the same week a year ago.

The refinancing share of mortgage activity decreased from 30.7% to 30.2% of total applications.

According to the MBA,

  • The 30-year fixed mortgage rate hit the 6% mark for the first time since 2008.
  • Rising mortgage rates weighed heavily on refinancing activity as buyers remained on the sidelines.
  • The widening spread between the compliant 30-year fixed mortgage rate and ARM and Jumbo loans reflects uncertainty about future Fed policy decisions.

For the coming week

It’s been a quiet week on the economic data front, with US economic indicators limited to housing sector statistics. Although the numbers are generating interest, they are unlikely to influence US Treasury yields.

However, the Fed’s monetary policy decision on Wednesday and the FOMC’s economic forecast will have a significant impact on mortgage rates. A hawkish Fed rate hike would support another hike in mortgage rates.