US long-term average mortgage rates recover to 5.51%

WASHINGTON — U.S. long-term average mortgage rates rose again this week, just as the latest government data shows inflation hasn’t slowed, meaning the Federal Reserve is almost certain to raise its rate. benchmark interest later this month.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate rose to 5.51% from 5.30% last week. A year ago the average rate at 30 years was 2.88%.

The average rate on 15-year fixed-rate mortgages, popular with home refinancers, rose to 4.67% from 4.45% last week. A year ago, the rate was 2.22%.

The Federal Reserve raised its benchmark rate by a half point in May and another three-quarters of a point last month, the largest single increase since 1994. -Decade high inflation. Most economists expect the Federal Reserve to raise its lending rate by between a half point and three-quarters of a point when it meets later this month.

Fed officials acknowledge their rate hikes could weaken the economy, but suggested such moves were necessary to rein in price increases to the Fed’s 2% annual target.

The Labor Department reported Wednesday that its consumer price index soared 9.1% over the past year, the biggest annual increase since 1981. On Thursday, Labor released data showing its producer price index, which measures inflation before it reaches consumers, rose 11.3%. in June compared to a year earlier.

The Fed’s short-term benchmark rate, which affects many consumer and business loans, will now be set in a range of 1.5% to 1.75%, with Fed policymakers forecasting a doubling of that range by the end of the year.

Higher loan rates have discouraged home hunters and cooled what was a red-hot real estate market, one of the most important sectors of the economy. Sales of previously occupied US homes slowed for the fourth straight month in May.

Home prices continued to rise in May, even as sales slowed. The national median home price rose 14.8% in May from a year earlier to $407,600, an all-time high according to NAR data going back to 1999.

Mortgage applications are down 14% from last year and refinancings are down 80%, the Mortgage Bankers Association reported this week. Those numbers could recede further with more rate hikes from the Federal Reserve almost certainly.

Layoffs in the housing and loan sectors have already started. On Tuesday, online mortgage company LoanDepot said it would cut 2,000 jobs.

Last month, online real estate broker Redfin said it was laying off 8% of its workers and Compass said it was laying off 450 employees.

The nation’s largest bank by assets, JPMorgan Chase, is laying off hundreds of people from its mortgage unit and has reassigned hundreds to jobs in other parts of the company.

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