Mortgage rates rise to 6.7%, the highest point since 2007

Interest rates in the United States continue to trend upwards, reaching the highest level in more than 15 years. This increase in borrowing costs puts even more pressure on those looking to buy a home. 

The mortgage rate for a 30-year home loan climbed to 6.7 percent, according to the weekly survey of lenders published by Freddie Mac. Interest rates have been growing for six consecutive weeks. The borrowing costs are rising at a fast pace: just one week ago, the 30-year fixed mortgage averaged 6.29 percent, and a year ago, it was at 3.01 percent. 

“The uncertainty and volatility in financial markets is heavily impacting mortgage rates,” said Freddie Mac’s Chief Economist Sam Khater. “Our survey indicates that the range of weekly rate quotes for the 30-year fixed-rate mortgage has more than doubled over the last year.” 

On September 21, the Federal Reserve raised benchmark interest rates by 0.75 percent for the third time in a row in an effort to curb inflation. Currently, the US inflation rate sits at 8.3 percent. The rapid jump in mortgage rates weakens demand from homebuyers. 

After two years of a housing boom, a growing number of would-be-buyers are backing out of home purchase agreements. In August, more than 15 percent of homes fell out of contracts. Although the housing market has cooled off, home prices across the country remain high. The median home sale price in New York went up 3.1 percent from last year, according to Redfin.  

Higher mortgage rates make it more difficult to afford a home right now. However, the reduced demand from homebuyers also means less competition. The seller’s market is slowly turning into a buyer's market, which means there is an opportunity to negotiate the asking price. Now, homebuyers have a chance to explore different options and weigh the pros and cons. 

“The large dispersion in rates means it has become even more important for homebuyers to shop around with different lenders,” Khater said.

Resources:

“Mortgage Rates Rise for the Sixth Consecutive Week,” (Freddie Mac, 2022)

“Mortgage rates climb to 15-year high,” by TRD Staff (The Real Deal, 2022)

“Mortgage Rates Hit 15-Year High At 6.7% As Some Economists Raise Forecast,” by Andrea Riquier (Forbes, 2022)

“US Mortgage Rates Jump to 6.7%, Hitting Highest Level Since 2007,” by Prashant Gopal (Bloomberg, 2022)

“The 30-year home mortgage rate hits 6.7%, highest since 2007,” by Rob Wile (NBC News, 2022)

“Fed raises rates by another three-quarters of a percentage point, pledges more hikes to fight inflation,” by Jeff Cox (CNBC, 2022)