The upward trend in mortgage rates continues for the sixth consecutive week, as concerns mount over a potential interest-rate hike by the U.S. Federal Reserve. According to data released by Freddie Mac on Thursday, the average 30-year fixed-rate mortgage now stands at 7.63% as of Oct. 19, marking a 6 basis point increase from the previous week. This surge has placed current rates at their highest level since December 2000.
Comparatively, one year ago, the average 30-year rate was 6.94%, indicating a noticeable rise in borrowing costs. The 15-year mortgage rate also experienced a slight increase, averaging 6.92% on Oct. 19, up from 6.89% just last week. In contrast, the same rate was recorded at 6.23% a year ago.
It is essential to note that Freddie Mac compiles its weekly report on mortgage rates based on thousands of applications received from lenders nationwide. These applications are submitted to Freddie Mac when borrowers apply for mortgages. Though separate data from Mortgage News Daily reveals that the 30-year fixed-rate mortgage currently sits at an average of 8% as of Thursday afternoon.
Freddie Mac's Perspective
Chief economist at Freddie Mac, Sam Khater acknowledged the persistent climb in mortgage rates, emphasizing their adverse impact on affordability. As rates continue to approach eight percent, potential homebuyers should consider and prepare for these financial challenges.
Shopping Around for the Best Mortgage Rate
According to experts, it is crucial for borrowers to explore multiple lenders in order to secure the best mortgage rate. In today's market, Freddie Mac has introduced a helpful down-payment-assistance tool to assist both lenders and borrowers in finding programs that can lower the overall cost of purchasing a home.
The Reality of Reported Rate Numbers
It is important to keep in mind that the reported rate numbers are just averages and do not apply uniformly to all situations. The actual offerings will differ among lenders and are contingent upon factors such as the type of loan and the creditworthiness of the borrower. Andy Walden, Vice President of Enterprise Research at Intercontinental Exchange, emphasizes the need for potential home buyers to compare rates from multiple sources. By doing so, they can make an informed decision that ensures the most cost-effective mortgage payment.
A Glimmer of Hope for 2024
Despite the challenges faced by the housing market in 2023, Bob Broeksmit, President and CEO of the Mortgage Bankers Association, predicts that mortgage rates will become more moderate in 2024. This forecast brings hope and relief to individuals who are eager to purchase a home.
As you embark on your home-buying journey, remember that thorough research and comparing rates from various lenders is essential in securing the most favorable mortgage rate.