US mortgage rates rise for a fifth week, topping 7.5%

MORTGAGE rates in the US rose for the fifth week in a row, topping 7.5 per cent for the first time in more than two decades.

The average for a 30-year, fixed loan was 7.57 per cent, up from 7.49 per cent last week, Freddie Mac said on Thursday (Oct 12).

Mortgage rates hovering above 7 per cent are pushing potential buyers out of the market, and those who can withstand the costs are battling over a shortage of properties for sale. A measure of house tours and other signs of early demand by Redfin fell to its lowest level in nearly a year for the four weeks till Oct 8.

“The housing market remains fraught with significant affordability constraints,” Sam Khater, Freddie Mac’s chief economist, said. “As a result, purchase demand remains at a three-decade low.”

Policymakers are weighing the potential for more Federal Reserve rate hikes after a jobs report last week showed an unexpected surge in employment in September. Inflation has also ticked up, with a measure of US consumer prices rising for a second straight month in September, data released on Thursday showed.

“The Fed’s ‘higher for longer’ monetary policy keeps upward pressure on rates, making a descent unlikely until new data suggests that inflation is moving in the right direction,” said Hannah Jones, senior economic research analyst at Realtor.com. BLOOMBERG