The average long-term mortgage rate rose to 6.42% this week, ending a streak of six consecutive weeks of falling rates, according to mortgage giant Freddie Mac.
Last week, the average 30-year fixed rate was 6.27%. That was a marked improvement from late October and early November when the average peaked at a 20-year high of 7.08%.
But those recent dips did little to erase a year defined by a dramatic jump in the cost to finance a home purchase. The average 30-year fixed rate was 3.11% during the last week of 2021. While there was significant volatility from week to week, the trend for most of this year has consistently pointed upward.
The average rate surpassed 4% on March 17, hit 5% on April 14, and after a mid-summer lull, eclipsed 6% on Sept. 15.
“It was a roller coaster,” said Zahra Jafri, founder and president of Lynx Mortgage Bank in Westbury. “There was certainly extreme volatility. When the market started to move up, it went very quickly.”
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The data is published weekly every Thursday by Freddie Mac, which uses mortgage application data submitted by lenders during the preceding week to calculate the average. Freddie Mac purchases loans from lenders on the secondary market.
Higher mortgage rates have significantly reduced the number of home sales, as potential homebuyers face more expensive monthly payments, if they can still afford to buy at all. Some homeowners who bought or refinanced when rates were at historic lows could also face more expensive housing costs if they move and accept a higher mortgage rate.
“The housing market remains in the doldrums with declining sales, inventory and prices,” Sam Khater, chief economist at Freddie Mac, said in a statement.
Khater’s outlook for the U.S. housing market in early 2023 isn’t much better.
“While the intensity of weakness is moderating, the market continues to decline and forward leading indicators suggest housing will remain weak throughout the winter,” he said.
On Long Island, the number of pending home sales fell 31.3% last month compared with November 2021.
Prices haven’t been affected to the same extent because of a limited supply of homes for sale. The median price in Nassau County among closed sales rose 2.5% to $668,000 compared with November 2021. In Suffolk, the median increased 4.8% year over year to $545,000.
Jafri described the local housing market as being in a state of gridlock with sellers reluctant to put their houses on the market and buyers waiting for prices to come down to reflect higher financing costs.