Mortgage Rates Hit 6.95% as Fed Hikes Key Rate
The 30-year fixed mortgage rate climbed to 6.95%, its highest level in 19 months, following the Federal Reserve's first interest rate hike since 2023.
The average rate for a 30-year fixed home loan reached 6.95% this week. This marks the highest level in nearly 19 months. The figure rose from 6.76% in the previous week. It was 6.26% one year ago. This is the fourth consecutive week of increases.
The Federal Reserve raised its benchmark interest rate by 0.25 percentage points. The new key rate stands at approximately 3.9%. This is the first increase since 2023. The central bank signaled a potential second hike to 4.1% later this year.
Borrowing Costs Continue To Climb
Rates on 15-year fixed mortgages also increased. The average rose to 6.26% from 6.09%. A year ago, this rate was 5.41%. Higher rates raise monthly payments for new buyers. They also make refinancing less attractive for existing homeowners.
The Fed aims to control inflation with these moves. Higher borrowing costs target mortgages and auto loans. Credit card interest rates may also rise. Affordability concerns are now a major issue for households. These costs influence business spending decisions as well.
Retail Spending Shows Resilience
US retail sales grew by 1.2% in August. This beat the expected 0.7% gain. July sales had previously fallen by 0.5%. Excluding gas stations, sales rose by 1.1%. These figures are not adjusted for inflation.
Online retailers saw a 2.6% increase in sales. Clothing and accessories stores grew by 0.7%. Furniture and home furnishings stores rose by 0.9%. Consumers spent heavily during summer sales events. Tax refunds in spring also boosted earlier spending.
Labor Market Remains Stable
Initial jobless claims dropped to 196,000 last week. This is the lowest level since mid-July. The previous week recorded 206,000 claims. The four-week average fell to 203,250. Economists had predicted 207,500 claims.
Low claim numbers indicate few layoffs are occurring. Most Americans maintain job security. Claims have stayed between 200,000 and 230,000 for a year. This suggests the labor market remains tight. Wall Street ended the week with mixed results. The S&P 500 finished virtually unchanged. The Dow Jones Industrial Average declined. The Nasdaq composite barely held positive territory. Data from GN auto markets and housing reports highlights these shifts.
