Washington, DC
CNN
—
US mortgage rates remained elevated this week, rising for the third week in a row, but stayed just under the market’s 7% threshold.
The 30-year fixed-rate mortgage averaged 6.96% in the week ending August 10, up from 6.90% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.22%.
“There is no doubt continued high rates will prolong affordability challenges longer than expected,” said Sam Khater, Freddie Mac’s chief economist. “However, upward pressure on rates is the product of a resilient economy with low unemployment and strong wage growth, which historically has kept purchase demand solid.”
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.
The rate stayed elevated this week after the Federal Reserve highlighted its reliance on data on jobs and inflation in its July monetary policy meeting and in recent comments.
Markets had been waiting for July’s inflation report, released Thursday morning, which showed consumer price hikes rose 3.2% annually, the first increase in 12 months. The data also showed that shelter costs contributed 90% of total inflation last month.
“July’s Consumer Price Index holds significant importance for the Fed’s upcoming decisions,” said Jiayi Xu, an economist at Realtor.com.
Since inflation rose, it could support the Fed’s concern that the battle is not over, Xu said. The Fed also will consider the forthcoming August employment and inflation data prior to the next policy meeting, in September.
In addition, the most recent jobs report offered some mixed signals about the labor market, Xu said, including a smaller number of net new jobs added and a dipping unemployment rate.
“While July’s jobs report itself is very unlikely to have a direct impact on the Fed’s upcoming decision, the decline to a 3.5% unemployment rate may imply that more significant slowing is needed to align with the Fed’s projected year-end rate of 4.1%,” she said.
This story is developing and will be updated.
