30-year fixed-rate mortgage hits 20-year high

U.S. mortgage rates hit a two-decade high this week as the economy continues to grapple with the fallout from inflation.

Why it matters: Higher rates threaten to stall home sales as existing homeowners don't want to give up low-interest mortgages, while prospective buyers are hesitant to borrow.

What's happening: The average 30-year fixed-rate mortgage is 7.09%, up from 5.13% at this time a year ago, Freddie Mac reported Thursday in its Primary Mortgage Market Survey.

• "The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb," Freddie Mac chief economist Sam Khater said in a statement.

Yes, but: The recent uptick in mortgage rates brings them back to a more normalized level.

• The average topped 7% for most of the 1990s and all of the 1980s, when the average notched a record of more than 18% early in the decade.

The big question: How high can they go?

• MarketWatch cited three experts Thursday saying that 8% is possible.
• "If the 30-year-fixed mortgage rate can hold at a high mark of 7.2% — and the 10-year yield holds at 4.2% — then this would be the high for mortgage rates before retreating," Lawrence Yun, chief economist at the National Association of Realtors, told MarketWatch. "If it breaks this line and easily goes above 7.2%, then the mortgage rate reaches 8%."