Mortgage rates top 7% to reach a 21-year high
The rate on the 30-year-mortgage hit 7.16%, the highest since 2001, according to data released Wednesday morning from the Mortgage Bankers Association.
Why it matters: Fast-rising rates have flattened the once-frothy housing market. Home prices are falling quickly, but not fast enough to make home buying affordable for anyone looking to buy right now.
- Mortgage application activity is at its slowest since 1997, Joel Kan, MBA’s vice president and deputy chief economist said in a statement.
Catchup quick: The high rates are pushing down home prices. Just yesterday, new data was out showing American home prices fell by 2.4% in just the two months from June to August, as Axios' Felix Salmon reported.
- On the other hand, they're still up 4.8% in the past six months, 13.1% over the past year, and 42.2% since the pandemic hit.
What's ahead: The MBA predicts the 30-year-rate will start to fall in 2023 — but nowhere near the rock-bottom numbers so many homeowners have already locked in.
- The group forecasts rates hitting 5.4% at the end of next year.
Bottom line: The Fed's mission to tamp down inflation is sending mortgage rates sky-high and crushing demand for houses — which was actually the intention.