AP

Average mortgage rates rise after 6 weeks of declines

Dec 28, 2022, 7:28 PM | Updated: Dec 29, 2022, 9:30 am

FILE - Construction workers build new homes in Philadelphia, Tuesday, April 5, 2022. (AP Photo/Matt...

FILE - Construction workers build new homes in Philadelphia, Tuesday, April 5, 2022. (AP Photo/Matt Rourke, File)

(AP Photo/Matt Rourke, File)

WASHINGTON (AP) — The average long-term U.S. mortgage rate rose this week after falling for six straight weeks, adding to the challenges potential homebuyers face amid higher home prices and a limited supply of available houses.

Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate increased to 6.42% from 6.27% last week. That is more than double the year-ago average rate of 3.11%.

The long-term rate reached 7.08% in late October and again in early November as the Federal Reserve has continued to crank up its key lending rate this year in an effort to cool the economy and tame inflation.

The big increase in mortgage rates has torpedoed the housing market, with sales of existing homes falling for 10 straight months to the lowest level in more than a decade.

While home prices are now dropping as demand has declined, they are still nearly 11% higher than a year ago. Higher prices and a doubling of mortgage rates have made homebuying much less affordable and a much more daunting prospect for many people.

George Ratiu, senior economist at realtor.com, calculates that the monthly payment for a median-priced home is now about $2,100, before taxes and insurance, up more than 60% from a year ago. The median is halfway between the highest and lowest figures.

Sales of new homes are also falling. Ratiu expects mortgage rates will remain above 6% next year and sales to stay low.

“All of these data are indicative of a market going through a major reset, which is the Fed’s goal,” he said.

The Fed has hiked its benchmark interest rate seven times this year to a range of 4.25% to 4.5%, the highest in about 15 years. It has signaled it may raise them another three-quarters of a point next year.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Image: A cargo ship is stuck under the part of the structure of the Francis Scott Key Bridge after ...

Associated Press

Authorities identify 2 bodies recovered at site of Baltimore bridge collapse

A major bridge in Baltimore snapped and collapsed after a container ship rammed into it early Tuesday, and several vehicles fell into the river below.

2 days ago

Photo: Mountaineer Jim Whittaker has died at 95....

Gene Johnson, The Associated Press

Lou Whittaker, among the most famous American mountaineers, has died at age 95

Lou Whittaker, a legendary American mountaineer who helped lead ascents of Mount Everest, K2 and Denali, has died at age 95.

2 days ago

File photo: Former Sen. Joe Lieberman speaks in Washington on Jan. 18, 2024....

Associated Press

Former Sen. Joe Lieberman, Democrats’ VP pick in 2000, dead at 82

Former U.S. Sen. Joe Lieberman of Connecticut, who nearly won the vice presidency on the Democratic ticket with Al Gore in 2000, has died.

2 days ago

islamic state attack...

Vanessa Gera, The Associated Press

What we know after the Islamic State group claims responsibility for Moscow massacre

The Islamic State group has claimed responsibility for an attack on a suburban Moscow concert hall that killed at least 133 people.

5 days ago

Moscow shooting...

The Associated Press

Russia: 60 dead, 145 injured in concert hall raid; Islamic State group claims responsibility

Assailants burst into a concert hall in Moscow on Friday and sprayed the crowd with gunfire, killing over 60 people, injuring more than 100.

7 days ago

Photo: Britain's Kate, Duchess of Cambridge visits 282 (East Ham) Squadron, RAF Air Cadets, Cornwel...

Associated Press

Kate Middleton announces she has cancer, is undergoing chemotherapy

Kate Middleton, Princess of Wales, says she is undergoing chemotherapy to treat cancer. She has been out of view since Christmas.

7 days ago

Average mortgage rates rise after 6 weeks of declines