Mortgage rates hit 6%, a first since the housing crash of 2008 | Economic news

WASHINGTON (AP) — Average long-term U.S. mortgage rates soared more than 6% this week for the first time since the 2008 housing crash, threatening to push even more buyers out of a doomsday market. rapidly cooling housing.

Mortgage buyer Freddie Mac reported on Thursday that the 30-year rate rose to 6.02% from 5.89% last week. The average long-term rate has more than doubled in the past year and is the highest since November 2008, just after the housing market crash triggered the Great Recession. A year ago, the rate was 2.86%.

Rising interest rates — in part due to aggressive pressure from the Federal Reserve to rein in inflation — have cooled a housing market that has been boiling for years. Many would-be home buyers are being pushed out of the market as higher rates have added hundreds of dollars to monthly mortgage payments. Sales of existing homes in the United States have fallen for six consecutive months, according to the National Association of Realtors.

The average rate for 15-year fixed-rate mortgages, popular among those looking to refinance their homes, rose to 5.21% from 5.16% last week. Last year, at this time, the rate was 2.19%.

Mortgage rates do not necessarily reflect Fed rate hikes, but tend to track the yield of the 10-year Treasury. This is influenced by a variety of factors, including investor expectations for future inflation and global demand for US Treasuries.

Recently, faster inflation and strong economic growth in the United States caused the 10-year Treasury rate to skyrocket to 3.45%.

The Fed has raised its benchmark short-term interest rate four times this year, and Chairman Jerome Powell has said the central bank will likely have to keep interest rates high enough to slow the economy “for a while. time” in order to tame the worst. inflation in 40 years.

More inflation data this week suggests that while gasoline prices have fallen significantly since the start of the summer, prices for most other basic necessities have actually risen, panicking investors who fear a possible recession if the Fed continues to raise rates.

Most economists expect the Fed to raise its primary lending rate an additional three-quarters of a point when central bank leaders meet next week. Some fear the Fed could raise the rate a full point, after back-to-back three-quarter-point increases in its past two meetings.

The government said the U.S. economy contracted at an annual rate of 0.6% from April to June, a second consecutive quarter of economic contraction, which is meeting with an informal sign of recession. Most economists, however, said they doubted the economy was in recession or on the verge of a recession, given that the US labor market remains robust.

Applications for jobless aid fell again last week and remain at their lowest level since May, despite the Fed’s measures to control inflation, which also tends to cool the labor market.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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