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U.S. 30-Year Mortgage Rates Climb for Seventh Consecutive Week, Hitting 7.79%

by Gabriel Martinez
8 comments
Mortgage Rates

For the seventh week in a row, the average rate of the standard 30-year mortgage in the United States has escalated, making home ownership increasingly unaffordable for Americans.

Freddie Mac announced on Thursday that the rate for a 30-year fixed mortgage has reached 7.79%, up from 7.63% the previous week. This is a notable increase from the 7.08% rate recorded a year ago.

Rising mortgage rates can significantly impact borrowers, adding hundreds of dollars to monthly payments and making an already inaccessible housing market even more unattainable for many U.S. citizens. The high rates also deter current homeowners who secured much lower rates around 3% two years ago from putting their homes on the market.

According to the Mortgage Bankers Association, the national median mortgage payment stood at $2,155 in September, an 11% increase—equivalent to an additional $214—from the same period last year.

Meanwhile, sales of pre-owned homes in the United States continued to decline in September, marking the fourth consecutive month of decreased sales and the slowest rate of sales in over a decade.

Freddie Mac’s chief economist, Sam Khater, stated, “The market for purchasing homes has virtually come to a halt, affordability continues to be a major obstacle for many, and the only solutions are lower rates and increased housing supply.”

For the 15-year loan, rates have increased to 7.03% from 6.92%, up from 6.36% a year ago. These elevated rates have resulted in reduced applications for new mortgages. The Mortgage Bankers Association reported on Wednesday that new loan applications have reached their slowest weekly pace since 1995. Simultaneously, the proportion of applications for adjustable-rate mortgages climbed to 9.5%, the highest since November of last year.

The increased cost of home financing has significantly disrupted the U.S. housing market. Millions of Americans, who had locked in mortgage rates as low as 3% two years ago, find it financially prohibitive to move due to the current cost of borrowing.

Data from the National Association of Realtors revealed that not only did the sales of existing homes decrease for the fourth month in a row, but the rate of these sales also slowed to the lowest levels in more than ten years. In contrast, the pace of new home sales has exceeded economists’ expectations. In the previous month, new home sales surged to 759,000, approximately 79,000 more than anticipated.

Bill Adams, Chief Economist at Comerica, highlighted that home builders are the unexpected beneficiaries of the Federal Reserve’s attempts to mitigate inflation via interest rate hikes. “Homebuilders are leveraging interest rate incentives to channel demand towards newly constructed homes, and are also reducing floor plans to enhance affordability,” he noted.

Mortgage rates are closely tied to the 10-year Treasury yield, which is used by lenders to set loan prices. Factors such as investor expectations for future inflation, global appetite for U.S. Treasuries, and Federal Reserve policy actions can influence mortgage rates. The ongoing threat of sustained higher rates has driven the 10-year Treasury yield to its highest levels in over a decade, hitting 5% earlier this week and settling at 4.89% during midday trading on Thursday. This is a stark rise from the approximately 3.50% seen in May and a mere 0.50% at the early stages of the pandemic.

Frequently Asked Questions (FAQs) about Mortgage Rates

What is the current average rate for a 30-year mortgage in the U.S.?

The current average rate for a 30-year fixed mortgage in the United States is 7.79%, according to Freddie Mac. This rate has increased from 7.63% the previous week and 7.08% from the same period a year ago.

How is the rising mortgage rate affecting home sales?

The increasing mortgage rates are causing a decline in the sales of pre-owned homes, which have fallen for the fourth consecutive month and reached their slowest pace in more than a decade. However, new home sales have unexpectedly surged to 759,000, outpacing economists’ expectations.

How are higher mortgage rates impacting current homeowners?

Current homeowners who secured lower mortgage rates around 3% two years ago are deterred from selling their homes. The elevated rates make the comparative cost of financing a new home prohibitively high.

What has been the impact of rising mortgage rates on mortgage applications?

Applications for new mortgages have reached their slowest weekly pace since 1995, according to the Mortgage Bankers Association. Meanwhile, the proportion of applications for adjustable-rate mortgages has climbed to 9.5%, the highest level since November of the previous year.

How are home builders reacting to the current market conditions?

Home builders are taking advantage of the situation by offering interest rate incentives and shrinking floor plans to boost affordability in the newly constructed home segment. They have emerged as the unexpected beneficiaries of the Federal Reserve’s attempts to control inflation through interest rate hikes.

How are mortgage rates correlated with the 10-year Treasury yield?

Mortgage rates are closely tied to the 10-year Treasury yield, which lenders use as a guideline for pricing loans. The 10-year Treasury yield recently hit 5%, its highest level in over a decade, impacting mortgage rates accordingly.

What are some of the broader economic factors influencing mortgage rates?

Investors’ expectations for future inflation, global demand for U.S. Treasuries, and actions taken by the Federal Reserve on interest rates are some of the key factors that can influence rates on home loans.

What was the national median mortgage payment as of September?

The national median mortgage payment was $2,155 in September, representing an 11% increase—or an additional $214—from the same period a year ago, according to the Mortgage Bankers Association.

More about Mortgage Rates

  • Freddie Mac’s Latest Mortgage Rate Data
  • Mortgage Bankers Association Statistics
  • National Association of Realtors Monthly Sales Report
  • Federal Reserve Interest Rate Announcements
  • U.S. 10-Year Treasury Yield Historical Data
  • Analysis by Chief Economist at Comerica
  • U.S. Housing Market Trends
  • Impact of Federal Reserve Policy on Mortgage Rates

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8 comments

FinanceGuru101 October 27, 2023 - 1:22 am

This makes it so clear why no one is buying pre-owned homes. Those rates are killer. But new home sales rising? Didn’t see that coming.

Reply
BoomerBill October 27, 2023 - 2:51 am

Back in my day, we had double-digit mortgage rates and we managed. But 7.79% is still pretty high for these times. Expect a market shakeup soon.

Reply
PolicyPundit October 27, 2023 - 3:46 am

So the Fed’s attempt to cool inflation is making home ownership a distant dream for many. Irony at its finest.

Reply
EconWatcher October 27, 2023 - 7:56 am

The 10-year Treasury hitting 5% is a big deal. It’s setting the tone for everything else, including these mortgage rates. What a time to be alive.

Reply
MillennialMom October 27, 2023 - 9:16 am

Locked in at 3% two years ago and there’s no way I’m moving now. not with these rates! feel bad for first-time buyers tho.

Reply
RealEstateMaven October 27, 2023 - 2:02 pm

super interesting how home builders are the “unexpected winners” here. Clever tactics like shrinking floorplans and rate incentives are making a difference.

Reply
JohnDoe123 October 27, 2023 - 8:36 pm

Wow, 7.79% for a 30yr mortgage? Thats insane! I remember when it was hovering around 3%. Times are changing fast.

Reply
CryptoFan October 27, 2023 - 10:24 pm

Who needs mortgages when you’ve got crypto, lol. But seriously, the housing market’s goin nuts. Federal Reserve needs to do something.

Reply

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