<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1664301884463,"cms.content.publishUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1664301884463,"cms.content.updateUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_64301865", "obj": {"id":"27789","width":"16","height":"9","video":"1106119"} }); ","_id":"00000183-801f-d13a-a9ff-f93f5e110000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedMortgage rates have raced to above 7%, the highest level since 2001, as the Federal Reserve aggressively hikes interest rates.
As of Tuesday, the average 30-year fixed-rate mortgage popped to 7.08%, up a staggering 3.94 percentage points from a year before, according to Mortgage News Daily. That is a 1.8-point jump since just the start of August. The rate on an average 15-year fixed-rate mortgage rose to 6.33%.
The historic 7% level notched this week comes after Freddie Mac reported earlier this month that the 6% threshold had been breached, showing just how quickly the central bank’s action has been able to affect the housing market.
NEW HOME SALES UNEXPECTEDLY TICK UP IN AUGUST
Mortgage rates have been on an upward trajectory since just before the Fed started jacking up its interest rate target (which is a different, very short-term rate) in March. At the beginning of this year, mortgage rates were hovering at an ultra-low 3%, fueling a massive housing boom and sending homebuyers into a frenzy.
Last week, the central bank conducted a monster rate hike to the tune of three-quarters of a percentage point, or 75 basis points. It was the third such increase in just a matter of four months.
Rate hikes by the Fed and subsequent increases in mortgage rates have made housing less affordable, causing home sales to tumble.
Despite declines in existing home sales, investors were in for a surprise on Tuesday when Census data on new home sales for August indicated they grew by more than 20%. Still, new home sale data are notoriously volatile, and Tuesday’s release doesn’t entirely account for a recent run-up in cancellations.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“Mortgage rates are set to rise further in 2022 and 2023 as the Fed continues its unwavering fight against stubborn inflation,” said PNC senior economist Abbey Omodunbi. “But limited supply will remain a challenge in the housing market as rising mortgage rates will discourage homeowners who locked in low mortgage rates from selling.”
The Fed will meet in November to decide its next course of action regarding interest rates.
