US mortgage rates climb above 6% for first time since 2008

MORTGAGE rates in the US topped 6 per cent for the first time in nearly 14 years. 

The average rate for a 30-year loan jumped to 6.02 per cent from 5.89 per cent last week, Freddie Mac said in a statement on Thursday (Sep 15). The last time rates were above 6 per cent was in November 2008, the company’s data show.  

This year’s rapid rise in borrowing costs has slammed the brakes on the US housing market, sidelining potential buyers, crimping sales and slowing price growth. Weakening demand has forced lenders including Citigroup to cut jobs and spurred warnings from bank executives about falling revenue from the mortgage business.

Inflation in August ran hotter than expected, boosting expectations of a bigger interest rate hike from the Federal Reserve. That sent US Treasury yields rising on Tuesday after the data were released. 

“Mortgage rates continued to rise alongside hotter-than-expected inflation numbers this week,” Sam Khater, Freddie Mac’s chief economist, said in the statement. “Although the increase in rates will continue to dampen demand and put downward pressure on home prices, inventory remains inadequate. This indicates that while home price declines will likely continue, they should not be large.”

Freddie Mac’s results have lagged behind other mortgage surveys that had already been showing rates above 6 per cent. Mortgage News Daily portal reported an average of 6.3 per cent for 30-year, fixed loans, up from 6.12 per cent last week. 

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Mortgage rates in US jump to 5.89%, highest level since 2008

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“For real estate markets, the rising costs of borrowing are further cooling demand for homes and deepening the affordability crisis,” said George Ratiu, Realtor.com’s manager of economic research. BLOOMBERG