Mortgage rates reached a 20-year high on Thursday, passing 7 percent for the first time since April 2002, Freddie Mac reported. The news comes as rapidly-increasing borrowing costs continue to shut out many first-time borrowers and slow the U.S. housing market.
The 30-year fixed-rate mortgage, the most popular among Americans, rose to 7.08 percent on Thursday, up from 6.94 percent last week, Freddie Mac reported. A year ago, a 30-year mortgage averaged 3.14 percent.
A 15-year fixed-rate mortgage averaged 6.36 percent on Thursday, up from 6.23 percent last week, and up from 2.37 percent a year ago.
The steep increases are part of the Federal Reserve's aggressive efforts to curb skyrocketing U.S. inflation. But it is taking a toll on home buyers, who are also contending with elevated home prices, which rose dramatically during the heart of the Covid-19 pandemic.
Home sales have fallen in recent months as would-be buyers wait for better buying conditions.
"As inflation endures, consumers are seeing higher costs at every turn, causing further declines in consumer confidence this month. 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," Sam Khater, Freddie Mac's chief economist said in a prepared statement.
The 7.08 percent mortgage rate is still below the long-term average of 7.8 percent, according to Freddie Mac. In the early 1980s, mortgage rates reached double digit highs.
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