With the Federal Reserve continuing to raise interest rates, most recently earlier this month, new data shows that mortgage rates have surged once again.
According to the financial company Bankrate, the average interest rate on a 30-year mortgage rose to 6.66% this week, up from 6.58% last week.
While the average for 30-year fixed-rate mortgages has been around 6.33% over the last 52 weeks, just a year ago, the rate was at 5.45%.
Mortgage rates have soared as the Fed continues its fight to control inflation through its 10 consecutive decisions to raise key interest rates. However, Bankrate noted that while the moves from the central bank are influential, it doesn’t directly set fixed mortgage rates.
“Mortgage rates don’t take direct cues from the Fed and will instead respond to the outlook for the economy and inflation. A slowing economy and an easing of inflation pressures are the prerequisites for lower mortgage rates,” Greg McBride, Bankrate’s Chief Financial Analyst, said.
The Labor Department has reported that inflation is back to where it was in 2021, as it cooled to 4.9% in April.
Even still, mortgage rates have remained high and continue to have an impact on people’s ability to afford homes.
The U.S. Department of Housing and Urban Development reports that the national median family income for 2022 was $90,000, with the median price of an existing home being $375,700 in March of this year.
Bankrate shared that with a 20% down payment and current mortgage rates, the monthly payment on a home at the median market price would be nearly 26% of an average family’s monthly income.
While prices and average income have varied, Bankrate notes that last year at this time, the average home payment only required 19% of a family’s monthly income.
Even though mortgage rates are below their November 2022 peak of over 7%, they are nowhere near where they were in 2021, when the average rate was less than 3%.
