The average long-term U.S. mortgage rate jumped this week to its highest level in 20 years, grim news for would-be homebuyers already facing high home prices caused a lack of supply.
Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan jumped to 7.09% from 6.96% last week. That’s the highest since April of 2002, when the average rate clocked in at 7.13%.
The average long-term rate hit 7.08% in late October and again in early November.
One year ago, the rate averaged 5.13%.
“The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb,” said Sam Khater, Freddie Mac’s chief economist. “Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales.”
The average rate on a 30-year mortgage remains more than double what it was two years ago, when it was just 2.86%. Those ultra-low rates spurred a wave of home sales and refinancing. The sharply higher rates now are contributing to a dearth of available homes, as homeowners who locked in those lower borrowing costs two years ago are now reluctant to sell and jump into a higher rate on a new property.
The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, climbed to 6.46% from 6.34% last week. A year ago, it averaged 4.55%, Freddie Mac said.