Updated Aug 23, 2023 - Economy

Mortgage rates surge again, inching closer to 8%

Data: FRED Economic Data, St. Louis Fed, Mortgage News Daily; Chart: Axios Visuals

U.S. mortgage rates keep going up, inching closer toward 8%.

Driving the news: The average 30-year fixed mortgage rate hit 7.49% this week, Mortgage News Daily reports, only days after rates soared to their highest levels since 2001.

Why it matters: With mortgage rates at a two-decade high, the rising cost of homeownership puts it increasingly out of reach for many Americans.

  • The trend is being exacerbated by upward pressure on broader market rates, which began with the Federal Reserve's aggressive tightening campaign against inflation, which may or may not be done yet.

What's happening: Yields on the U.S. 10-year Treasury bond, which influences mortgage rates and other forms of borrowing, are perched around 16-year highs.

  • That's scaring away potential first-time borrowers, and making current property owners increasingly unwilling to sell their homes, as Axios Macro's Courtenay Brown reports.

Between the lines: Existing home sales slumped further in July as homeowners locked into lower-interest mortgages shy away from selling.

What they're saying: Some experts say mortgage rates could go up further.

  • "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%."

Flashback: It could be a lot worse. Mortgage rates reached their highest point in history in 1981, when the annual average was 16.63%.

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