Market Report: Mortgage Rates Approach 8% Threshold
The average rate for the 30-year fixed mortgage surged to 7.72% on Tuesday, as reported by Mortgage News Daily. These mortgage rates are influenced by the yield on the 10-year Treasury, which has been on an upward trajectory this week, driven by robust economic data. This marks the highest mortgage rates have been since the close of 2000.
At the outset of this year, the 30-year fixed rate had dipped to around 6%, sparking a brief surge in activity within the spring housing market. However, over the summer, rates began a steady ascent, leading to a decline in home sales despite a persistent high demand. The current trajectory suggests the potential for rates to breach the 8% threshold.
While the Federal Reserve refrained from increasing interest rates two weeks ago, it hinted at the possibility of another rate hike this year, with fewer anticipated cuts next year. Investors have been closely monitoring the outcome of economic data in the early days of October.
Matthew Graham, Chief Operating Officer at Mortgage News Daily, noted, “It is now the first week of October, and data has been stronger. This morning’s JOLTS (job openings and labor turnover survey) is the biggest, baddest confirmation so far this week, and it’s pushing yields to fresh long-term highs. Pretty simple stuff, actually, even if unpleasant and unfortunate for fans of low rates.”
These elevated rates have significantly impacted affordability, affecting both new and existing home sales markets. Although builders had previously benefited from the limited supply of existing homes for sale, higher mortgage rates are now a major concern. Builder sentiment dipped into negative territory in September, marking the first occurrence in five months.
To put these rates into perspective, for a borrower purchasing a $400,000 home with a 20% down payment on a 30-year fixed loan, the monthly payment today is approximately $930 higher than it was when rates were at 3% during the peak of the Covid-19 pandemic.
