U.S. Mortgage Rates Top 7% for First Time in Two Decades

By Geoffrey Smith

Investing.com — Benchmark U.S. mortgage rates surged again last week to hit their highest level since 2001, cranking up the pressure on a housing market that is already slowing sharply.

The Mortgage Bankers Association’s jumped 22 basis points to 7.16%, amid ongoing concerns that the Federal Reserve will keep raising into next year as it tries to bring down rampant .

The MBA 30-year rate has now risen by 170 basis points in the last two months alone as inflation has continued to surprise to the upside. That is having an increasingly dire effect on the housing market, where fell another 1.7%, their 10th decline in the last 11 weeks.

While few would argue that the housing market had overheated as the pandemic triggered a shift in consumer demand that was accommodated by ultra-low interest rates, many fear that the pendulum is now swinging too fast in the other direction, due to its relatively high sensitivity to interest rate dynamics.

Data released on Tuesday by showed nationwide house prices fell a seasonally adjusted 1.3% in August, their biggest monthly drop since the deflation of the subprime housing bubble in 2008/9. prices have now fallen by 57% this year, making it the worst-performing of all the major commodities in 2022, while and , especially for single-family units, have both now been in decline for months.