US 30-year fixed mortgage rate jumps to near 21-1/2-year high
Reuters
Published Aug 17, 2023 02:07PM ET
Updated Aug 17, 2023 03:21PM ET
By Safiyah Riddle
(Reuters) - U.S. mortgage rates surged this week, with the popular 30-year fixed rate hitting the highest level in more than 21 years, further complicating the housing market outlook.
The average 30-year rate shot up to 7.09%, the highest level since April 2002, from 6.96% in the prior week, mortgage finance agency Freddie Mac (OTC:FMCC) said on Thursday. It is nearly 2 percentage points above where it was the same period last year.
The average 15-year rate also jumped to 6.46%. It was up from 6.34% the week prior and was also the highest level since April 2002.
At the same time, the yield on the 10-year Treasury note - which acts as a benchmark for mortgage rates - reached the highest levels in 10 months on Thursday, bolstered by fears that strong U.S. domestic demand could prompt the Federal Reserve to raise interest rates again.
"The last time the 30-year fixed-rate mortgage exceeded seven percent was last November," said Freddie Mac's chief economist Sam Khater. "Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales."
The housing market was affected most immediately and severely by the U.S. central bank's aggressive monetary policy tightening beginning 2022, but has recently shown signs of stability. On Wednesday, the Commerce Department reported that single-family housing construction surged in July amid an acute shortage of previously owned homes on the market.
But sky-high mortgage rates could temper recent building trends, keeping supply tight and house prices elevated. Higher mortgage rates were blamed for the ebb in confidence among homebuilders in August.
"The housing market has been surprisingly resilient, confounding expectations for the last year," said Bright MLS chief economist Lisa Sturtevant. "However, with prices even higher than they were a year ago in many markets, crossing the 7% mortgage rate threshold again could be what sets in motion a major contraction in the housing market this fall."
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.