The 30-year fixed mortgage rate more than doubled from last year to 6.7% on Thursday.
The flat rate on 30-year mortgages rose 0.41% from a week ago, according to Freddie Mac data. A year ago, this figure was 3.01 percent. It’s also the highest since July 2007, when the subprime mortgage crisis was in its early stages.
While the Federal Reserve recently raised interest rates from 3 percent to 3.25%, this is the highest level since 2008, the mortgage rate is not directly tied to the Fed, but to the yield on ten-year U.S. Treasuries.
As Breitbart New economics editor John Carney explains:
The Federal Reserve does not directly regulate mortgage rates. Instead, it targets the overnight lending rate for banks and pays interest at the overnight reserve level. Long-term interest rates reflect the expected path of short-term rates over time. Mortgage rates, on the other hand, tend to reflect the direction of long-term rates, particularly 10-year Treasury yields.
The 10-year yield fell to 3.75 percent on Thursday after hitting 4 percent on Wednesday, the highest in more than a decade. Wall Street Magazine.
The rise in mortgage rates comes at a time when the US housing market is already slowing down. Breitbart News said home sales fell 12.7% month-on-month and 29.6% year-on-year in August.
Higher mortgage rates can deter existing homeowners from selling as they lock themselves into a higher rate.
According to Bankrate.com, if someone buys a $500,000 home today with a 20 percent down payment, they can expect to pay around $259,000 in interest over 30 years. However, if they bought the house for the same price and down payment when President Joe Biden took office in January 2021, they would only pay $189,400 in interest over 30 years.
You can follow Ethan Letkeman on Twitter at: @EthanLetkeman.
Source: Breitbart
