Mortgage rates in the US crossed 7% for the first time in more than two decades.
The average for a 30-year, fixed loan rose to 7.08% from 6.94% last week, Freddie Mac said in a statement Thursday. That’s the first time the measure has climbed past 7% since April 2002.
Mortgage rates have more than doubled this year, throwing cold water on the frenzied housing market of the pandemic. The affordability crunch has sidelined potential buyers, sending home sales falling. Prices have started to drop from their Covid-era peaks.
“As inflation endures, consumers are seeing higher costs at every turn, causing further declines in consumer confidence this month,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “In fact, many potential homebuyers are choosing to wait and see where the housing market will end up, pushing demand and home prices further downward.”
The market slowdown has hit companies including homebuilders. PulteGroup Inc. reported earlier this week that orders plunged and deal cancellations spiked as buyers face both financial and psychological hurdles.
Despite the market’s pullback, buyers are still contending with high prices, squeezing affordability. The monthly payment on a $300,000 mortgage now would be roughly $2,012, about $710 more than in January, when the 30-year average was 3.22%.
Other measures of borrowing costs have previously crossed the 7% threshold. Data from the Mortgage Bankers Association showed the average for a 30-year fixed mortgage topping 7% last week.
This article was provided by Bloomberg News.