Mortgage rates have hit their highest level in more than twenty years, making homeownership even less affordable for plenty of would-be buyers.
The average interest rate on a 30-year, fixed-rate home loan climbed to 7.09% this week. That’s according to mortgage giant Freddie Mac. That’s the highest it’s been since April 2002 and comes after the Federal Reserve has raised interest rates aggressively to fight inflation.
Mortgage rates have more than doubled in the last two years, spiking the cost of a typical home loan. NPR calculated that the monthly payment on a $350,000 house today, assuming a 20% down payment, would be $1,880, much higher than the $1,159 it would cost in 2021, when interest rates were below 3%.
Rising interest rates make it harder for first-time buyers and homeowners to buy and trade up respectively. Sales of homes in June were down almost 19% from a year ago.
Mortgage rates are closely tied to the 10-year Treasury yield, which has also been climbing recently since many expect the Federal Reserve to keep interest rates higher for longer to bring inflation under control. The 10-year yield reached a staggering 4.3% on Thursday.
