Interest rates

U.S. mortgage rates are high! Could they reach 8%?

The latest U.S. mortgage rates are the highest they have been in decades.

The average 30-year fixed-rate mortgage rose to 7.23% in the week ending 25th August 2023, up from 7.09% the week before, according to latest bank reports from U.S. This is the highest level since June 2001, when it was 7.24%.

The rate on a 30-year fixed mortgage increased to 7.31% in the week ended 18th August 2023, according to Mortgage Bankers Association data. This is the highest level since late 2000.

The 30-year fixed mortgage rate averaged 7.16% with 0.68 points as of August 16, according to U.S. News. This is up from 7.09% with 0.7 points the previous week. The adjustable-rate mortgage increased to 7.6%.

Inflation driving interest rates up

The rise in mortgage rates is driven by indications of ongoing economic strength and inflation pressures, which have also pushed up Treasury yields and the Federal Reserve’s interest rate expectations.

Higher mortgage rates make home buying more expensive and reduce the affordability of homeownership. They also discourage existing homeowners from selling or refinancing their homes, which contributes to the low inventory of available homes for sale.

As a result, home sales have declined and home prices have soared in many markets. Will interest rates touch 8%?

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