30-year fixed mortgage rate reaches highest point since 2009: Freddie Mac

Affordability challenges rise for potential homebuyers

The average 30-year fixed-rate mortgage rate surged to its highest point since 2009, according to Freddie Mac.  (iStock)

Mortgage rates climbed once again after a brief pause in increases last week, according to the latest data from Freddie Mac. The 30-year fixed-rate mortgage surged to 5.27% annual percentage rate (APR) for the week ending May 5, 2022, according to Freddie Mac’s weekly Primary Mortgage Market Survey. This is up from 5.1% the previous week and from 2.96% last year. 

"The Freddie Mac fixed rate for a 30-year loan resumed its climb this week, rising from 5.1% to 5.27%, on the heels of two significant moves announced by the Federal Reserve on Wednesday," Realtor.com Senior Economic Analyst Joel Berner said. "In an attempt to counter the most sever inflation since 1982, the Federal Open Market Committee has implemented the largest interested rate increase since 2000 to slow the flow of money through the economy."

Other mortgage rates also increased, including the 15-year mortgage which averaged 4.52%. That's up from 4.4% last week and 2.3% last year. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) increased as well, to an average 3.96%. That's up from 3.78% last week and from 2.7% last year.

If you're interested in lowering your current mortgage rate, consider taking out a refinance. You can ​use Credible's free online tool​ to easily compare multiple lenders at once and determine if this is the right option for you.


Future rate hikes this high may not be necessary, economist says

The Federal Reserve raised interest rates by half a percentage point during its May meeting, the highest rate hike in 20 years as it continues to fight rising inflation. It marked the second time the Fed raised interest rates since the beginning of the COVID-19 pandemic, and could continue to push interest rates higher through the end of the year.

Berner believes, however, that future rate hikes are unlikely to be as high as May's increase. 

"[The Federal Reserve] signaled its intent to decrease the money supply by reducing the size of its balance sheet to the tune of tens of billions of dollars each month," he said. "Pulling this lever increases the potency of the rate increase, which allowed Chair Jerome Powell to signal that additional rate increases of more than 50 basis points are not imminent."

If you're interested in taking advantage of current mortgage interest rates before they rise higher, you could consider refinancing your mortgage. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best mortgage rate for you.


Rising rates are presenting challenges to affordability

As mortgage rates surge, it's becoming increasingly difficult for borrowers to afford a home amid higher interest rates and home prices, according to Freddie Mac Chief Economist Sam Khater.  

"While housing affordability and inflationary pressures pose challenges for potential buyers, house price growth will continue but is expected to decelerate in the coming months," he said.

Financing a home — including saving up for a down payment and paying closing costs — has grown more expensive, leaving potential homebuyers with higher monthly payments.

"After nearly three years of mortgage rates under 4%, a new reality has emerged for homebuyers," Berner said. "Not only are listing prices at an all-time high, financing a home purchase has gotten significantly more expensive. With much higher monthly payments, buyers who don’t have savings for a large down payment risk being priced out of the market.

If you're interested in buying a home in today's housing market, you can visit Credible to compare multiple lenders at once and choose the one with the best rate for you.

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