Aug. 17 (UPI) -- FreddieMac said Thursday the average U.S. 30-year fixed-rate mortgage interest is 7.09%, the highest in 21 years.
The strong U.S. economy is helping drive those rates as demand has been affected by high home prices.
That's up from 6.96% last week. A year ago the rate averaged 5.13%.
"The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb," said FreddieMacs Chief Economist Sam Khater, in a statement. "The last time the 30-year fixed-rate mortgage exceeded seven percent was last November. Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales."
For 15-year fixed rate mortgages the average rate Thursday was 6.46%, up from 6.34% last week. The year-ago 15-year fixed rate was 4.55%.
Wednesday the Mortgage Bankers Association said mortgage applications fell 0.8%.
New single-family home construction contracted in August. The National Association of Home Builders blamed it on high loan rates as well as stubbornly high inflation in housing.
While inflation and demand versus limited supply has increased home prices, the Fed's multiple rate hikes designed to lower inflation have combined to push mortgage interest rates higher.
According to the National Association of Realtors, existing home sales in 2023 are down 18.9% from a year ago. Median existing-home prices were at $410,200, the second-highest median price ever recorded, according to the NAR.
