Mortgage rate climb, closing in on 7%

The 30-year fixed-rate mortgage averaged 6.92% in the week ending Oct. 13, down from 6.66% the previous week, according to Freddie Mac. This is the highest average rate since April 2002. A year ago, the 30-year fixed rate stood at 3.05%.

Mortgage rates have more than doubled over the past year as the Federal Reserve continued its unprecedented campaign of raising interest rates to rein in soaring inflation. The combination of central bank rate hikes, investor worries about a recession and mixed economic news has made mortgage rates volatile over the past few months.

“We continue to see a story of two economies in the data,” said Sam Khater, chief economist at Freddie Mac. “Strong job and wage growth is keeping consumer balance sheets positive, while lingering inflation, recession fears and housing affordability are causing housing demand to fall precipitously.”

He said the next few months will undoubtedly be important for the economy and the housing market. Already, home sales are falling and prices are also falling.

According to Freddie Mac, the average mortgage rate is based on a survey of conventional home purchase loans for borrowers who have a 20% stake and have excellent credit. But many buyers who put less money up front or have less than perfect credit will pay more.

This is a developing story and will be updated.

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