If you thought mortgages have become expensive, brace yourself.
The average rate offered for a 30-year fixed mortgage surged this week to 7.23% from 7.09% the week before, reaching the highest level since 2001, mortgage giant Freddie Mac said Thursday.
- The average rate offered for a 30-year mortgage jumped to 7.23%, the highest level since 2001.
- Mortgage rates have been pushed higher by the Federal Reserve's war on inflation.
- Higher mortgage rates have elevated the cost of taking out a mortgage to the point where a six-figure income is required to buy a typical house.
Mortgage rates have more than doubled since the beginning of 2022, tracking a surge in yields on 10-year Treasury notes, which influence the rates that lenders offer for mortgages.
Yields have been pushed upward by the Federal Reserve’s months-long campaign of interest rate hikes, which are intended to cool inflation by slowing the economy. Yields on 10-year Treasurys rose to their highest point since 2007 this week amid investor concerns that the economy is staying resilient. That could spur the Fed to keep its benchmark interest rate—currently at its highest since 2001—higher for longer.
Markets are also bracing for a policy speech by Federal Reserve Chairman Jerome Powell on Friday, which could signal whether the Fed will push rates even higher.
“Stronger-than-expected economic data in recent months, uncertainty over the path forward of real interest rates, and rising risks of higher inflation have continued to cause longer-term yields and mortgage rates to move higher,” Orphe Divounguy, senior macroeconomist at Zillow Home Loans, said in a commentary Wednesday, in a statement ahead of Freddie Mac’s data.
Ballooning mortgage rates have pushed average costs to purchase a home out of reach for all but high-income households. With costs soaring out of sight, the volume of applications for new mortgages fell to its lowest since 1995, the Mortgage Bankers Association said this week.