Grand Canyon Times

Already-high mortgage rates in Arizona are due to rise even more after a recent decision by the Federal Reserve to once again raise interest rates. The move is expected to price many American families out of purchasing a home. 

The rate hike is part of the Federal Reserve's "campaign to cool inflation," The Wall Street Journal reported. The average rate on a 30-year fixed mortgage has now risen to 5.78% nationally, with many areas in the U.S. exceeding 6%. Just a week ago, Freddie Mac reported an average mortgage rate of 5.23%. The increase in mortgage rates is the largest weekly increase since 1987.

"The surge marks the largest weekly increase since 1987. It stands to add to the pressure on U.S. home prices, which remain strong despite rising rates and tumbling affordability," Orla McCaffrey and Sam Goldfarb said, according to The Wall Street Journal.

Adding to the strain of homeowners is the fact that the consumer price index has now risen to 8.6% in May from the same month a year ago, which is another 40-year high growth rate, according to the Bureau of Labor Statistics.

The Journal is reporting that the exact impacts of the rate hike are not yet known, due to the move being unprecedented. However, some investors are concerned that the rate increase could be the thing that tips the U.S. into recession. 

According to the same analysis by the Journal, last month homebuyers paid an average of $740 per month more for a median-priced U.S. home than they did in May of last year. This time last year, mortgage rates were hovering around 3%.

Experts in the home lending industry expect that the mortgage rates are not likely to reverse any time soon. Fed Chairman Jerome Powell said he expects another rate increase, of either 0.5 or 0.75%, at the next meeting in July. Some lenders are even exceeding those rates, providing customers with quotes of more than 6%.

According to MarketWatch, Eric Finnigan, a director at John Burns Real Estate Consulting, said that mortgage rates rising from 3% at the start of this year to 6% will rule out 18 million households from qualifying for a $400,000 mortgage.

As of this week, the going rate for a 30-year fixed mortgage in Arizona is 5.98%, according to Bankrate.com.