Mortgage rates soar to 14-year high after Fed rate hike

June 16, 2022 Updated Fri., June 17, 2022 at 4:01 p.m.

By Kathy Orton Washington Post

Higher-than-expected inflation data caused a rapid escalation in mortgage rates.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average soared to 5.78% with an average 0.9 point.

It was 5.23% a week ago and 2.93% a year ago. The 55-basis-point increase is the biggest one-week jump since 1987. (A basis point is 0.01 percentage point.)

The 30-year fixed average hasn’t been this high since November 2008.

Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national averages.

The survey is based on home purchase mortgages. Rates for refinances may be different.

It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.

The 15-year fixed-rate average climbed to 4.81% with an average 0.9 point. It was 4.38% a week ago and 2.24% a year ago.

The five-year adjustable rate average rose to 4.33% with an average 0.3 point. It was 4.12% a week ago and 2.52% a year ago.

“The Freddie Mac fixed rate for a 30-year loan continued climbing this week in response to last week’s inflation data and in anticipation of this week’s increase in the target federal funds rate,” said Hannah Jones, an economic data analyst at Realtor.com.

“Although rates tracked by Freddie Mac remain in the fives, other mortgage surveys showed interest rates exceeding 6 percent early this week in response to inflation data which increased to 8.6 percent in May.”

The Federal Reserve approved its largest interest rate increase since 1994 last week, raising its benchmark rate by 0.75 percentage point.

The rate hike is the third this year by the Fed as it tries to tame inflation.

At its May meeting, the central bank raised the federal funds rate by a half-percentage point.

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