The average rate on a five-year adjustable-rate mortgage rose to 6.22% from 6.15% last week. It was 3.52% one year ago.
Mortgage rates have steadily been rising since the start of 2021. The average rate on the 30-year fixed-rate mortgage has risen for five consecutive weeks, reaching its highest point in November. According to Freddie Mac, the 30-year rate is now 6.73% compared to 3.85% a year ago.
The Federal Reserve has raised its key lending rate eight times in less than a year, bringing it to a range of 4.5% to 4.75%, the highest level in 15 years. While the Fed’s rate hikes have an impact on borrowing rates, mortgage rates are usually more closely tied to the 10-year Treasury yield. Investors' expectations for future inflation, global demand for US Treasurys, and the Federal Reserve's decisions can all influence the cost of borrowing for a home.
The impact of these higher rates has been felt across the housing market. Sales of existing homes have fallen for 12 consecutive months and January sales cratered by nearly 37% from a year earlier. Homebuyers may have to contend with higher costs, on top of already high home prices.