Wolf Street | August 24, 2023
Today, Freddie Mac’s weekly measure of the average 30-year fixed mortgage rate hit a two-decade high of 7.23%. The next higher rate, 7.24%, occurred in June 2001. Beyond that single week in 2001, today’s average was the highest since 2000.
Various measures have already hit two-decade highs, including the Mortgage Bankers Association’s weekly measure, which rose to 7.31% yesterday; and the daily measure by Mortgage News Daily, which jumped to 7.49% on August 22, and currently sits at 7.37%. In response to these higher rates, applications for mortgages to purchase a home have plunged to multi-decade lows.
In terms of the housing market, 7% mortgage rates are not a problem – we’ve had them before, and much higher over the 30-year period in the 1970s through 1990s. The problem are home prices that spiked ridiculously in recent years during the Fed’s interest-rate repression; these prices are not sustainable, and we’re already seeing that in many markets.
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