Average Mortgage Rate Rises to 7.23%, Highest Since 2001
New York, NY, August 25, 2023-"Mortgage rates pushed to a fresh two-decade high this week, making it tougher for the housing market to emerge from its stark slowdown,” reports the Wall Street Journal.
“The average 30-year fixed mortgage came with an interest rate of 7.23%, according to data published Thursday by Freddie Mac. Some borrowers are paying even loftier rates. The rate was 7.09% a week ago, its first time above 7% since last fall.
“The new high is a turnabout from two years earlier, when borrowing rates were below 3%, near record lows. Millions of people were rushing to buy homes and refinance. Now, financing a typical home purchase costs hundreds of thousands of dollars more in interest.
“Applications for purchase mortgages dropped to their lowest levels since 1995, the Mortgage Bankers Association said this week. Existing-home sales fell for the fourth time in five months in July.
“‘The conveyor belt of houses that come on and off the market is just grinding to a halt,’ said Sam Khater, chief economist at Freddie Mac.
“Mortgage rates, which rose for most of last year, resumed their upswing in recent months when the Federal Reserve signaled it is in no rush to loosen monetary policy. The economy has stayed strong in the era of higher rates, meaning the central bank may keep rates high or lift them further to hold inflation in check.
“Mortgage rates tend to loosely follow the yield on the benchmark 10-year Treasury note, which also hit multiyear highs this summer. But mortgage rates have risen far more than government bond yields recently.
“They have been about 1.75 percentage points higher than the going Treasury yield on average over the past half-century, but in the past year they have been almost 3 percentage points higher, according to Urban Institute data.”