Mortgage rates touched their highest level in nearly 14 years this week, another blow to the rapidly cooling housing market.
The average rate on a 30-year fixed mortgage rose to 5.89%, topping an earlier high from June, according to a weekly survey by Freddie Mac released Thursday. This time last year, rates were below 3%.
And mortgage rates look set to continue rising. The Federal Reserve has been lifting rates to try to curtail inflation, which has driven up borrowing costs across the board. The central bank currently appears to be on a path to lift rates another 0.75 percentage point this month.
The housing market is a key focus for the Federal Reserve because rising costs there are a major component of this year’s sky-high inflation. It also is an area where Fed policy can have an outsize impact because the housing market is so sensitive to interest rates. Higher rates can add hundreds of dollars to a buyer’s monthly mortgage costs.
“We’re all focused on the housing sector,” said Fed Vice Chairwoman Lael Brainard at a banking conference Wednesday.
h/t silvertomars