Mortgage rates jump by most in 35 years

WASHINGTON » Average long-term U.S. mortgage rates had their biggest oneweek jump in 35 years with the Federal Reserve this week raising its key rate by three-quarters of a point in bid to tame high inflation.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate climbed from 5.23% last week to 5.78% this week, the highest its been since November of 2008 during the housing crisis.

Wednesday’s rate hike by the Fed was its biggest in a single action since 1994.

The brisk jump in rates, along with a sharp increase in home prices, has been pushing potential homebuyers out of the market. Mortgage applications are down more than 15% from last year and refinancings are down more than 70%, according to the Mortgage Bankers Association.

Those figures are likely to worsen with more Fed rate increases a near certainty.

The Fed’s unusually large rate hike came after data released last week showed U.S. inflation rose last month to a four-decade high of 8.6 %. The Fed’s benchmark shortterm rate, which affects many consumer and business loans, will now be pegged to a range of 1.5% to 1.75% — and Fed policymakers forecast a doubling of that range by year’s end.

Higher borrowing rates appear to be slowing the housing market, a crucial part of the economy. Sales of previously occupied U.S. homes slowed for the third consecutive month in April as mortgage rates surged, driving up borrowing costs for would-be buyers as home prices soared.

On Tuesday, the online real estate broker Redfin, under pressure from the cooling housing market, said Tuesday that it was laying off 8% of its workers.

Homeownership has become increasingly difficult lately, especially for firsttime buyers. Besides staggering inflation, rising mortgage rates and soaring home prices, the supply of homes for sale continues to be scarce.

The average rate on 15year, fixed-rate mortgages, popular among those refinancing their homes, rose to 4.81% from 4.38% last week. A year ago, the rate was 2.24%.

NAM Y. HUH — THE ASSOCIATED PRESS A home for sale in Wheeling, Ill. Average long-term U.S. mortgage rates made their biggest one-week jump in 35 years, one day after the Federal Reserve raised its key rate by three-quarters of a point in bid to tame high inflation. Mortgage buyer Freddie Mac reported that the 30-year rate climbed from 5.23% last week to 5.78% this week, the highest it’s been since November 2008during the housing crisis.