Mortgage rates have continued to rise for the seventh straight week, reaching their highest point in over 23 years, according to the Mortgage Bankers Association (MBA).
The average 30-year mortgage rate for Americans reached 7.9% on Wednesday, up from 7.7% just one week ago, the highest point since September 2000, according to a press release from the MBA. Mortgage applications sank even further following the high rates, with application volume declining 1% from the previous week when seasonally adjusted, the lowest weekly pace since 1995.
“Ten-year Treasury yields climbed higher last week, as global investors remained concerned about the prospect for higher-for-longer rates and burgeoning fiscal deficits,” Joel Kan, vice president and deputy chief economist at MBA, said in the press release. “Mortgage rates followed Treasuries higher, with the 30-year fixed mortgage rate jumping 20 basis points to 7.9 percent — the highest since 2000. Rates have now risen seven consecutive weeks at a cumulative amount of 69 basis points.”
Ten-year Treasury yields, which serve as an indicator for the direction of mortgage rates, reached 4.86% on Monday after spiking to 4.98% on Oct. 19, the highest point since 2007, according to the Federal Reserve Bank of St. Louis.
Treasuries are facing pressure from the Federal Reserve’s interest rate hikes, which have brought the federal funds rate to a range of 5.25% and 5.50% after a series of 11 raises that started in March 2022. The rate was raised in an attempt to tame inflation, which peaked at 9.1% in June 2022 and has remained elevated, increasing 3.7% in September and August.
“Mortgage activity continued to stall, with applications dipping to the slowest weekly pace since 1995,” Kan said in the press release. “These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity.”
The average interest rate for mortgages over $726,200 increased from 7.56% to 7.78%, according to the MBA.
Housing affordability has suffered under rising mortgage rates coupled with increasing housing prices, giving Americans only half the purchasing power that they had three years ago. As of August, a median-income household can only afford a 30-year mortgage on a $356,273 house, compared to December 2020, when that same family could afford a mortgage on a $737,392 house.
Will Kessler on October 25, 2023