The reality of 8% mortgage rates
AmeriVet Securities head of U.S. rates Gregory Faranello on the Fed pausing rate hikes, his outlook for the market and the UAW strike.
Mortgage rates continued their unrelenting upward climb last week, adding potentially thousands in additional costs for would-be homebuyers.
Rates on the popular 30-year fixed mortgage are currently hovering around 7.63%, according to Freddie Mac, well above the 6.94% rate recorded one year ago and the pandemic-era low of just 3%.
This is the highest level for rates since December 2000.
«Mortgage rates continued to approach eight percent this week, further impacting affordability,» said Sam Khater, Freddie Mac’s Chief Economist. «In this environment, it’s important that borrowers shop around with multiple lenders for the best mortgage rate.»
The astronomical rise in mortgage rates over the past year came as the Federal Reserve waged an aggressive campaign to crush high inflation. In the span of just 16 months, the central bank approved 11 rate increases – the fastest pace of tightening since the 1980s.
Homes in Hercules, California, US, on Wednesday, August 16, 2023. The U.S. 30-year mortgage rate rose to 7.16% last week, matching the highest since 2001 and crimping both sales and refinancing activity. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
While the federal funds rate is not what consumers pay directly, it affects borrowing costs for home equity lines of credit, auto loans and credit cards.
Even just a minor change in rates can affect how much would-be homebuyers pay each month.
A FOX Business analysis compared the average monthly payments on 30-year fixed-rate mortgages in October 2021 – when rates hovered around 3.09% – and two years later, with
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