Mortgage rates hit 14-year high as inflation persists

Last week’s 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 percent with an average 0.9 point. (A point is a fee paid to a lender equal to 1 percent of the loan amount. It is in addition to the interest rate.) 

It was 5.23 percent a week ago and 2.93 percent 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 percent with an average 0.9 point. It was 4.38 percent a week ago and 2.24 percent a year ago.

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

“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 this 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. It took its first steps toward bringing down inflation in March when it boosted its benchmark rate for the first time since 2018. Although the Fed does not set mortgage rates, its actions influence them.