(ReclaimingAmerica.net) – In a new testimony to the worsening economic situation on President Joe Biden’s watch, the cost of average mortgages in the United States has spiked to its highest in almost 23 years since December 2000.
The average long-term mortgage rate has reached 7.49%, up from 7.31% only a week earlier, mortgage buyer Freddie Mac announced on Thursday.
The new figure is nearly one percentage point higher compared with a year ago when the average rate stood at 6.66%, reports The Associated Press, as cited by Newsmax.
The average rate on 15-year fixed-rate mortgages frequently used for refinancing home loans has also increased, reaching 6.78% against 6.72% a week earlier. Freddie Mac notes that a year back, its average was 5.90%.
At the same time, the average 30-year mortgage rate is over twice as high as in 2021, when it stood at 2.99%.
The week of October 2 became the fourth in a row with growing mortgage rates, with the weekly average 30-year loan rate keeping over 7% since mid-August.
The rate has reached its highest since December 8, 2000, when its average was 7.57%.
The AP report stresses that the highest average mortgage rates in 23 years will restrict further home affordability in a market “already out of reach for many Americans.”
It adds that while the sales of previously occupied homes collapsed by 21% in January-August 2023, the affordability crisis has deteriorated due to a “low home inventory” coupled with growing mortgage rates.
Data from the Mortgage Bankers Association shows that last week saw the lowest level of home loan applications in 28 years since 1995.
“Several factors, including shifts in inflation, the job market and uncertainty around the Federal Reserve’s next move, are contributing to the highest mortgage rates in a generation,” commented Freddie Mac’s chief economist, Sam Khater.
“Unsurprisingly, this is pulling back homebuyer demand,” he observed.
AP notes that the Fed has already raised the primary interest rate to its highest since 2001 to tame inflation.
The possibility of higher rates over an extended period has caused Treasury yields to spike to their highest in 15 years: on Tuesday, the 10-year Treasury yield reached 4.80%, the highest since 2007, though it has subsided somewhat.
The report points out that mortgage rates are likely to follow the yield of the 10-year Treasury notes.