The rate is nearly double what it was nine months ago, according to data by Freddie Mac.
The spike in mortgage rates comes after the Bureau of Labor Statistics reported less than promising news regarding the consumer price index. The CPI for housing rose 0.7% in August and showed an increase of 6.2% annually — the largest increase since 1990.
“Mortgage rates at or above 6 percent is likely the new reality and prices will have to adjust,” said Lisa Sturtevant, chief economist with Bright MLS, told The Washington Post. “Relatively strong demand and still-low inventory will continue to support stable or growing prices in most markets, but gone are the days of seeing offers tens or even hundreds of thousands of dollars over asking price. In some places, particularly high-cost markets and places where prices have grown fastest over the past two years, we could see year-over-year price declines.”
As mortgage rates have steadily increased since June, the housing market has cooled from its astronomical highs. In July, home sales fell for the sixth consecutive month. With the new rate, the market is likely to continue declining.
“Mortgage rates have gone up four weeks in a row because of investors’ concerns about inflation,” said Holden Lewis, home and mortgage expert at NerdWallet, per The Washington Post. “Their worries are warranted, as we learned this week that inflation ran hotter than expected in August, as reflected in the consumer price index. That news boosted mortgage rates higher — a phenomenon that will be reflected in next week’s rates.”
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