Mortgage rates surpassed 6 percent for the first time in 14 years as inflation proved resistant so far to the Federal Reserve’s efforts to tamp it down. The dramatically swift escalation has chilled what had been a hot U.S. housing market, increasing pressure on an economy plagued by unremitting inflation.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average shot to 6.02 percent with an average 0.8 point. (A point is a fee paid to a lender equal to 1 percent of the loan amount. It is in addition to the interest rate.) It was 5.89 percent a week ago and 2.86 percent a year ago. The last time the 30-year fixed average was this high was in November 2008.

The 30-year fixed-rate mortgage, the most popular home loan product, has nearly doubled in the past nine months.

Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national averages. The survey is based on home purchase mortgages. Rates for refinances may be different. It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.

The 15-year fixed-rate average surged to 5.21 percent with an average 0.9 point. It was 5.16 percent a week ago and 2.12 percent a year ago. The five-year adjustable rate average climbed to 4.93 percent with an average 0.2 point. It was 4.64 percent a week ago and 2.51 percent a year ago.

“Mortgage rates have gone up four weeks in a row because of investors’ concerns about inflation,” said Holden Lewis, home and mortgage expert at NerdWallet. “Their worries are warranted, as we learned this week that inflation ran hotter than expected in August, as reflected in the Consumer Price Index. That news boosted mortgage rates higher — a phenomenon that will be reflected in next week’s rates. The Federal Reserve was already going to increase short-term rates next week in its effort to restrain inflation. They might dial up the aggressiveness in response to this week’s unexpectedly high inflation report, further propelling mortgage rates upward.”

Inflation data released by the Bureau of Labor Statistics this week revealed consumer prices accelerating in August, particularly for items such as housing and food. The consumer price index had housing costs up 0.7 percent in August and 6.2 percent higher annually, the largest increase since 1991.

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August’s inflation reading surprised investors, who are wondering whether the Federal Reserve will consider lifting its benchmark rate by 100 basis points, rather than 75 basis points as it did in July. (A basis point is 0.01 percentage point.) The Fed’s rate-setting committee meets next week.

In an effort to tamp down inflation, the central bank has raised the federal funds rate four times this year. It started with a 25-basis point increase in March, followed by a 50-basis point increase in May and back-to-back 75-basis point hikes in June and July. The Fed will likely want to see signs inflation is abating before it pulls back on raising rates.

When investors are worried about inflation, their appetite for buying bonds diminishes because the return on their investment is less when inflation is high. Inflation erodes the value of a bond’s future payments. Less demand causes bond prices to drop and yields to rise. Since mortgage rates tend to follow the same path as the 10-year Treasury yield, they rise, too.

The yield on the 10-year Treasury popped back up to 3.42 percent on Tuesday before slipping to 3.41 percent on Wednesday, its highest level since mid-June.

“The higher-than-expected CPI gave the Fed the permission to push forward with their 0.75 percentage point increase with some economists suggesting even a one percentage point increase would be viable,” said Nicole Rueth, producing branch manager at the Rueth Team. “Mortgage rates have already baked in this move with the jump we saw over the last two days.”

Home prices are expected to fall but not crash

Mortgage rates might not have peaked yet, Rueth said.

“Comparative inflation from a year ago still has us replacing a very low inflation in September 2021,” she said. “With today’s inflationary pressures — Russia, China and now the Railroad strike — we could see September’s CPI — released early Oct — still higher. October 2021’s inflation started the trend higher, so year-over-year comparisons will give us some relief. As inflation comes down, so will mortgage rates.”

Bankrate.com, which puts out a weekly mortgage rate trend index, found more than three-quarters of the experts surveyed expect rates to go up in the coming week.

“Inflation remains broad-based and problematic,” said Greg McBride, chief financial analyst at Bankrate.com. “The Fed will continue to be aggressive in raising rates, and there is more supply of mortgage-backed bonds that need to be absorbed as the Fed retreats.”

Calculate how much more mortgages will cost as interest rates rise

Meanwhile, higher rates have weakened mortgage demand to its lowest level in more than two decades. The market composite index — a measure of total loan application volume — decreased for the fifth week in a row, falling 1.2 percent last week, according to Mortgage Bankers Association data.

The refinance index fell 4 percent and was 83 percent lower than a year ago. The purchase index sank 12 percent. The refinance share of mortgage activity accounted for 30.2 percent of applications.

“The mortgage market got off to a slow start during the first full week of September, as applications declined due to a spike in mortgage rates to highs last seen in 2008,” Bob Broeksmit, MBA’s president and chief executive, wrote in an email. “With all eyes on the Federal Reserve’s next steps to tame high inflation, borrowers can expect continued volatility in mortgage rates.”

Not only are fewer borrowers applying for a mortgage, but those who are face tighter lending standards. The MBA also released its mortgage credit availability index (MCAI), which showed credit availability slipped in August. The MCAI slid 0.5 percent to 108.3 last month. A decrease in the MCAI indicates lending standards are tightening, while an increase signals they are loosening.

“Mortgage credit availability declined slightly in August, as investors reduced their offerings of [adjustable-rate mortgages] and non-[qualifying mortgage] loan programs,” Joel Kan, an MBA economist, said in a statement. “With overall origination volume expected to shrink in 2022, some lenders continue to streamline their operations by dropping certain loan programs to simplify their offerings. Additionally, with a worsening economic outlook and signs of cooling in home-price growth, the appetite for riskier loan programs has been reduced.

“Slightly offsetting these trends, however, was a small increase last month in new [home equity line of credit] products. With aggregate home equity still at elevated levels, HELOCs could benefit borrowers who might not want to give up on their current, low mortgage rate but do want to utilize their home equity to support other spending plans.”