Mortgage rates moved closer to 7% this week amidst a perfect storm of recession fears, stubborn inflation and the hint of more Federal Reserve interest rate hikes, further dampening housing market outlooks for at least the near future.

The average 30-year, fixed-rate mortgage inched up to 6.94% the week ending Oct. 20, according to Freddie Mac. The most popular mortgage product inched up 2 basis points from last week and was the highest level since April 2002. A basis point is one-hundredth of a percentage point. At this same time last year, the rate was nearly four percentage points lower, at 3.09%.

The 15-year, fixed-rate mortgage averaged 6.23% this week, up from 6.09% a week before and 2.33% a year ago.

The average 5/1 adjustable-rate mortgage (ARM) was at 5.71%, down from 5.81% last week and 2.54% a year ago. As borrowing costs have surged, ARMs have become more popular since they now have a lower rate than fixed-rate mortgages. ARMs made up 12.8% of all applications for mortgages for the week ending Oct. 14, according to the latest Mortgage Bankers Association (MBA) report. That’s quickly approaching a 10% jump from comprising just 3% of all mortgage applications in January 2022.

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