The milestone comes after months of escalation.
The 30-year fixed mortgage rate rose to 8% this week, reaching that level for the first time since 2000. Mortgage news daily.
The milestone comes after months of rate hikes. As recently as last April, the 30-year fixed mortgage rate was below 5%, Mortgage News Daily data show.
An aggressive series of interest rate hikes by the Federal Reserve since last year has lifted 10-year Treasury bond yields, which loosely track long-term mortgage rates.
The central bank has increased interest rates to combat elevated inflation, trying to reduce price increases by slowing the economy and reducing demand.
Although inflation has eased significantly from a peak of 9% last summer, inflation remains more than a percentage point above the central bank’s inflation target.
The persistence of elevated inflation prompted the central bank to promote a policy of keeping interest rates high for longer periods of time, which pushed up the 10-year Treasury yield and put upward pressure on mortgage rates.
Mortgage rates have risen for five consecutive weeks, according to data released by Freddie Mac Last Thursday.
Major housing industry groups expressed “deep concern” about rising mortgage rates last week in a letter urging the Federal Reserve to hold off on raising benchmark interest rates.
“The speed and scale of these [mortgage] The rate hikes, and the resulting displacement in our industry, are painful and unprecedented,” wrote Real estate groups, including the National Association of Realtors and the National Association of Home Builders.
High mortgage rates have slowed the housing market dramatically as homebuyers avoid the steep borrowing costs and home sellers prefer to lock in mortgages at relatively low rates.
Mortgage applications fell to their lowest level since 1996 Association of Mortgage Brokers said earlier this month.
Meanwhile, sales of previously owned homes fell more than 15% in August from a year ago. National Association of Realtors. The recession coincided with a sharp increase in costs for potential homebuyers.
When the Fed began the rise in bond yields with the first rate hike of its current series, in March 2022, the average 30-year fixed mortgage rate was just 4.42%. Mortgage news daily The data shows.
Each percentage point increase in mortgage rates can add thousands or tens of thousands in additional costs each year, depending on the price of the home. Rocket Mortgage.
Federal Reserve Chairman Jerome Powell spoke at a press conference in Washington last month Agreed The continuing effect on mortgages of rising interest rates has led to activity in the housing market “remaining lower than a year ago, largely reflecting higher mortgage rates.”
According to forecasts released last month, the central bank expects to raise rates one more time this year. The central bank plans to make its next rate hike decision in early November.
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