{"id":17148,"date":"2023-08-25T06:01:54","date_gmt":"2023-08-25T11:01:54","guid":{"rendered":"https:\/\/ustower.net\/?p=17148"},"modified":"2023-08-25T06:01:58","modified_gmt":"2023-08-25T11:01:58","slug":"us-mortgage-interest-rates-surged-to-7-23-a-22-year-high","status":"publish","type":"post","link":"https:\/\/ustower.net\/?p=17148","title":{"rendered":"US mortgage interest rates surged to 7.23%, a 22-year high"},"content":{"rendered":"\n

US mortgage rates surged again this week, rising to their highest level since 2001.
The 30-year fixed-rate mortgage averaged 7.23% in the week ending August 24, up from 7.09% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.55%.
Indications of\u00a0ongoing economic strength\u00a0will likely keep mortgage rates where they are or send them higher in the short term, said Sam Khater, Freddie Mac\u2019s chief economist.
Rates have been above 6.5% since the end of May and have been climbing higher since mid-July. Prior to last week\u2019s rate, the last time rates were over 7% was in November of last year, when they hit 7.08%.
This week\u2019s average rate is the highest the 30-year, fixed-rate mortgage has been since the week ending June 1st, 2001, when it was 7.24%.
Mortgage rates have spiked during the Federal Reserve\u2019s historic inflation-curbing campaign, sending home affordability to its lowest level in several decades. Buying a home is more expensive because of the added cost of financing the mortgage and rising home prices.
The inventory of existing homes has dramatically declined as homeowners who previously locked in lower rates are reluctant to sell. The combination of low inventory and high costs has squeezed would-be homebuyers and sent overall home sales way down.
Strong economy is keeping inflation higher longer
The 10-year Treasury yield has been hovering above 4.0% since the start of the month, which has helped drive mortgage rates over 7%.
Higher mortgage rates are expected to stick around as the bond market grapples with signs of a\u2002growing economy\u00a0and what implications it could have on future monetary policy moves by the Federal Reserve, said George Ratiu, chief economist at Keeping Current Matters, a real estate market insights and content company.
\u201cFinancial markets are concerned that the central bank will continue raising the funds rate, pushing borrowing costs higher,\u201d he said. \u201cFor many investors there is worry that the Fed may overtighten on the monetary front and lead to economic damage.\u201d
While the Fed does not set the interest rates that borrowers pay on mortgages directly, its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed\u2019s actions, what the Fed actually does and investors\u2019 reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.
\u201cWhile the central bank was behind the curve in 2021 as inflation was picking up steam, dismissing it as \u2018transitory,\u2019 it took a much more aggressive stance in 2022 with sharp increases in the policy rate,\u201d said Ratiu. \u201cAt the same time, the Fed has been aiming for a \u2018soft landing\u2019 in its monetary actions, meaning subduing inflation without hurting economic activity.\u201d
Few took that as a likely outcome in 2022, but a year and a half into the tightening cycle, inflation is moderating and the economy continues to grow, Ratiu said.
This is resulting in higher borrowing costs for consumers, and that isn\u2019t expected to change in the near term.
\u201cFor buyers and sellers, today\u2019s mortgage rates are presenting a significant affordability challenge,\u201d said Raitu. \u201cFor most people buying a home means borrowing money. At today\u2019s rate, the monthly cost to purchase a home totals about $2,400, not including property taxes and insurance, a 17% increase from a year ago.\u201d
Home affordability worsens
Hopeful house hunters have proved sensitive to rate hikes, with recent sales of homes\u00a0dropping most\u2002when mortgage rates climb over 7%.
Applications for a mortgage dipped to the lowest levels in 28 years last week, according to the Mortgage Bankers Association.
On top of the higher rates, homebuyers pulled back last week because of an erosion of their purchasing power, said Joel Kan, MBA\u2019s vice president and deputy chief economist. \u201cLow housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing.\u201d
While\u00a0existing home sales dipped\u2002in July,\u00a0new home sales\u00a0and\u00a0new home construction\u2002both picked up in the same period. But financing terms for the sales were likely locked in during June or July, when mortgage rates were in the mid-6% range, said Danielle Hale, chief economist at Realtor.com.
\u201cAs rates have surged past 7% and homebuying costs have risen yet again, home purchase mortgage applications have eased, suggesting that at least some potential buyers have been shut out of the market,\u201d Hale said.
Plus, she said, as rents notch a third month of declines, hopeful first-time home buyers may have more reasons to take their time or extend their lease, rather than rushing into a challenging and expensive market.
For now, all eyes are on the Fed to see if it hikes rates again in September or at the two other rate decision meetings scheduled this year.
\u201cRecent inflation data have improved in line with broad economic expectations, but the labor market and other indicators have suggested that a fair amount of momentum remains,\u201d Hale said. \u201cThis leaves the door open for a healthy debate about the right move at the next Federal Open Market Committee meeting after the Fed\u2019s July meeting rate hike.\u201d
Hale said she anticipates the Fed will hold rates steady at the next meeting in September.
\u201cThe more open question is whether additional hikes are in store as we near the end of the year,\u201d she said.
Jerome Powell, the Federal Reserve chair, will be speaking at an economic gathering at\u00a0Jackson Hole on Friday,\u00a0and Hale said her expectation is for him to remain committed to looking at the economic data.
Hale said that will mean \u201cmore near-term uncertainty for interest rates ahead.\u201d
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US mortgage rates surged again this week, rising to their highest level since 2001.The 30-year fixed-rate mortgage averaged 7.23% in the week ending August 24, up from 7.09% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.55%.Indications of\u00a0ongoing economic strength\u00a0will likely keep mortgage rates where […]<\/p>\n","protected":false},"author":5,"featured_media":17149,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[3787,3083,21933,10442],"class_list":["post-17148","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics","tag-mortgages","tag-new-highs","tag-rates-soar","tag-us"],"_links":{"self":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/17148","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17148"}],"version-history":[{"count":1,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/17148\/revisions"}],"predecessor-version":[{"id":17150,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/17148\/revisions\/17150"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/media\/17149"}],"wp:attachment":[{"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17148"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17148"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17148"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}