Mortgage rates continue to climb toward 8%, home purchases now at 'virtual standstill': Freddie Mac

Mortgage rates continued their upward trajectory this week, inching closer to 8% yet again as purchase demand sputters.

Freddie Mac reported Thursday that the average rate for the benchmark 30-year fixed mortgage has now hit 7.79%, up from 7.63% last week and from 7.08% a year ago.

The rate for a 15-year mortgage also climbed, averaging 7.03% after coming in last week at 6.92%. One year ago, the rate on a 15-year fixed note averaged 6.36%.

This is the seventh week in a row that rates have risen, marking the longest stretch of consecutive increases since spring 2022, Freddie Mac said.

ADULT KIDS ARE MOVING IN WITH PARENTS TO SAVE FOR HOMES

"Rates have risen two full percentage points in 2023 alone and, as we head into Halloween, the impacts may scare potential homebuyers," Freddie Mac chief economist Sam Khater said in a statement. "Purchase activity has slowed to a virtual standstill, affordability remains a significant hurdle for many and the only way to address it is lower rates and greater inventory."

With mortgage rates at their highest level in more than two decades, more would-be buyers are balking at the cost of a house payment. At the same time, more would-be sellers are opting to keep their homes rather than move and take on an interest rate that may be twice their current rate.

Economists now project 2023 will mark the slowest year for home sales since 2008, when the housing bubble burst.

THIS HOUSING HOTSPOT CONTINUES TO LOSE BUYERS

Redfin estimates there will only be roughly 4.1 million sales of existing homes across the nation by year's end due to persistently high mortgage rates and elevated home prices amid low inventory, which are causing prospective buyers to reconsider their plans.

The real estate brokerage also reported that 16.3% of home purchase agreements in the U.S. were canceled last month, the highest rate in nearly a year.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Data released last week by the Mortgage Bankers Association showed mortgage applications also tumbled in September to the lowest level since 1995.

FOX Business' Daniella Genovese contributed to this report.