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US mortgage rates hit 6% for the first time since the 2008 housing crisis

The interest rate on 30-year mortgages rose to 6.02 percent from 5.89 percent last week, reports mortgage buyer Freddie Mac.

Average long-term mortgage rates in the United States this week climbed above 6 percent for the first time since the 2008 housing crash, threatening to lock even more homebuyers out of a rapidly cooling housing market.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate rose to 6.02 percent from 5.89 percent last week.

The long-term average interest rate has more than doubled in a year and is the highest since November 2008, shortly after the housing market collapse triggered the Great Recession. A year ago the rate was 2.86 percent.

Rising interest rates — partly a result of the Federal Reserve’s aggressive push to curb inflation — have cooled a years-hot housing market.

Many would-be homebuyers are being squeezed out of the market as higher interest rates have added hundreds of dollars to monthly mortgage payments. According to the National Association of Realtors, sales of existing homes in the United States have declined for six straight months.

The average interest rate on 15-year fixed-rate mortgages, popular with those looking to refinance their homes, rose to 5.21 percent from 5.16 percent last week. Last year, the rate at this point was 2.19 percent.

The Federal Reserve has raised its short-term benchmark interest rate four times this year, and Chair Jerome Powell has said the central bank will likely need to keep interest rates high enough “for some time” to slow the economy in order to tame the worst of inflation since 40 years.

A worse-than-expected inflation reading on Tuesday cemented expectations that the Fed will be forced to deliver a third straight 75 basis point rate hike at its monetary policy meeting next week, with investors now predicting the central bank must hike rates faster and further than previously thought.

The impact of higher interest rates was felt across the housing sector.

New home sales plunged to a six-and-a-half-year low in July, while home resales and single-family home starts are at two-year lows.

But house prices remain high amid a critical shortage of affordable housing, making a housing market collapse unlikely.

The government reported that the US economy shrank at an annual rate of 0.6 percent from April to June, a second straight quarter of economic contraction, which coincided with an informal sign of recession.

However, most economists doubt the economy is in or on the brink of a recession as the US job market remains resilient.

Jobless claims fell again last week and remain at their lowest level since May, despite the Fed’s efforts to tame inflation, which also tends to cool jobs.

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