The average rate on the popular 30-year fixed mortgage rose to 7.72% on Tuesday 3rd October 2023, according to latest data
Mortgage rates follow loosely the yield on the 10-year Treasury, which has been climbing this week following strong economic data. Rates have not been this high since the end of 2000.
At the beginning of this year, the 30-year fixed rate dropped mortgage to around 6%, creating a short-lived burst of activity in the spring 2023. But it began rising steadily again over the summer months, causing sales to drop, despite strong demand. The current trend appears to be even higher, with the possibility of rates reaching over 8%.
U.S. mortgage rates, which are close to 8% according to some sources. This is a very high level compared to the recent years, and it may have significant implications for the housing market and the economy.
Main points
Some experts believe that rates could reach 8% later by the end of October, and possibly stay at that level for the remainder of the year. Others, however, think that rates may stabilize or decline slightly if the economic growth slows down or inflation eases.
30 year fixed mortgage rate at 7.72%
The average rate on the popular 30-year fixed mortgage rose to 7.72% as of Oct. 3, according to Mortgage News Daily. This is the highest rate since 2000.
Rates are rising as more economic indicators point to a strong U.S. economy, which increases the likelihood of the Federal Reserve to hike rates further. The 10-year Treasury yield, which closely tracks the mortgage rates, reached 4.8% on Tuesday, the highest level since August 2007.
Hitting 8% will be like crossing a psychological barrier for many buyers, as it will increase their monthly payments and reduce their affordability. It may also dampen the demand for housing, which has already been affected by low inventory and high prices.
Some buyers are already seeing 8% mortgage rates, especially those who have high loan-to-value ratios, high balance-conforming loans, or non-qualified mortgage loans. These could also be borrowers with lower credit scores or non-prime borrowers.