HomeReal EstateMortgage Rates Surge to 21-Year High

Mortgage Rates Surge to 21-Year High

U.S. mortgage rates surged past 7% this week, hitting their highest level in over two decades. Freddie Mac’s release on Thursday showed that mortgage rates went from 6.96% last week to 7.09%, marking only the third occasion that they have risen above the 7% mark since the first week of April 2002.

Mortgage rates have fluctuated more aggressively since the start of the Federal Reserve’s strict interest rate hiking agenda in an effort to beat down inflation. “I think what we’re seeing is the Fed’s efforts to crush inflation are in turn starting to crush demand,” National Association of Home Builders CEO Jim Tobin commented. According to Tobin, this is why many homeowners are reluctant to search for new properties, instead of remaining in their existing homes.

A survey by the Mortgage Bankers Association (MBA) for the week ending August 11 showed that overall purchase demand slumped by 26% compared to the same week a year ago. Purchase applications for a mortgage fell by 0.8% from the previous week, heading to its lowest level in nearly seven months.

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