Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate jumped to 7.08% from 6.94% last week. The last time the average rate was above 7% was April 2002, a time when the U.S. was still reeling from the Sept. 11 terrorist attacks, but six years away from the 2008 housing market collapse that triggered the Great Recession.
Last year at this time, rates on a 30-year mortgage averaged 3.14%.
“We’re really viewing this as a spike in mortgage rates that is pretty dramatically impacting affordability in the market, really sharply curtailing demand,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association.
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Rising Rates Cool the Housing Market
Many potential homebuyers have moved to the sidelines as mortgage rates have more than doubled this year, a trend that’s knocked the once red-hot housing market into a slump.
Sales of existing homes have declined for eight straight months as borrowing costs have become too high a hurdle for many Americans already paying more for food, gas, and other necessities. Meanwhile, some homeowners have held off putting their homes on the market because they don’t want to jump into a higher rate on their next mortgage.
Mortgage rates have risen sharply along with the 10-year Treasury yield, which has been climbing amid expectations that the Federal Reserve will keep hiking interest rates in its bid to bring down…
