US mortgage rates hit 23-year high

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After the Federal Reserve’s vigorous push to raise interest rates, American house loan rates have risen to their highest level in more than two decades, approaching 8% this week.

According to Mortgage News Daily, the average 30-year fixed mortgage rate hit 7.49% on Tuesday for the first time since late 2000, putting a strain on the post-Covid housing market.

According to the Mortgage Bankers Association, home-purchase applications declined for the sixth week in a row to their lowest level since 1995, as growing expenses made homeownership increasingly out of reach for many Americans.

“As time goes on and people have to roll out of those 30-year loans that they have, I think we’re going to see the effects in housing are going to be dire, but it’s going to take longer this time than before,” said TJM Institutional Services managing director James Iuorio to Fox Business.

Yields on the 10-year US Treasury note, which determines mortgage rates and other kinds of borrowing, are around 16-year highs as traders expect higher rates to last longer.

According to Bloomberg, most US officials continue to see major upside risks to inflation, which could need additional rate hikes. Mortgage rates will continue elevated as borrowing costs rise, putting more pressure on the residential property market, according to the publication.

Home sales fell in July as owners who had locked in lower-interest mortgages resisted selling. According to National Association of Realtors data, sales of previously owned homes were down 16.6% from July 2022.

Mortgage rates in the United States reached an all-time high in 1981, when the annual average was at 16.63%.