Average mortgage rates hit seven-year high as economy surges

Mortgage rates rose significantly across the board as the economy continued to show resilience with strong business activity and growth in employment, according to Freddie Mac.

The 30-year fixed mortgage rate rose 11 basis points to a seven-year high of 4.94% for the week ending Nov. 8, up from last week when it averaged 4.83%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.9%.

"Higher mortgage rates have led to a slowdown in national home price growth, but the price deceleration has been primarily concentrated in affluent coastal markets such as California and the state of Washington," Sam Khater, Freddie Mac's chief economist, said in a press release. "The more affordable interior markets — which have not yet experienced a slowdown home price growth — may see price growth start to moderate and affordability squeezed if mortgage rates continue to march higher."

The 15-year fixed-rate mortgage this week averaged 4.33%, up from last week when it averaged 4.23%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.24%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.14% with an average 0.3 point, up from last week when it averaged 4.04%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.22%.

Mortgage rates moved decisively following last Friday's jobs report, Aaron Terrazas, senior economist at Zillow, said when that company released its own rate tracker on Nov. 7. "The all-important read on the American labor market showed stronger-than-expected employment and wage growth, which gives the Federal Reserve yet another data point suggesting that the U.S. economy can withstand higher interest rates. After the jobs report, markets were in a holding pattern going into Tuesday's midterm election."

Despite some overnight volatility in bond markets, because the election results were largely in line with forecasts, the early read pointed to only modest impact on rates, he added.

Still, "a divided Congress would likely have a hard time enacting new legislation: Odds of new tax cuts are diminished, but so are the odds of any improvement in the fiscal outlook. The upward momentum for rates is likely to continue in the near term," Terrazas said.