Mortgage rates reached 7%, reaching their highest level in more than 20 years.
According to Freddie Mac’s announcement on Thursday, the average rate on the well-known 30-year fixed mortgage jumped to 7.09% this week from 6.96% the previous week. Only three times since then have rates above 7%, and that marks the highest point since the first week of April 2002. The last two occasions the rate topped 7.08% occurred in October and November of last year.
Since the beginning of the year, rates have been rising slowly as the Federal Reserve attempts to control inflation. The hike this week worsens affordability for purchasers on a tight budget who are already dealing with high home prices and a lack of options as a result of homeowners’ continued reluctance to sell and give up their lower mortgage rate.
Demand from homebuyers is falling.
According to the Mortgage Bankers Association (MBA) poll for the week ending August 11, the volume of mortgage purchase applications decreased by 0.8% from the previous week to reach its lowest level in over seven months. Purchase demand as a whole was 26% lower than it was during the same week last year.
The MBA pointed out that the rise in rates was what caused the activity to fall. The percentage of adjustable-rate mortgage applications, which typically have lower initial rates than fixed-rate mortgages, jumped to 7%, the highest level since April 2023, further demonstrating that borrowers are looking for relief.