As the Federal Reserve struggles to tamp down record-high inflation, mortgage rates this week rose above 7 percent for the first time since April 2002.
Rates have more than doubled compared with a year ago, the Wall Street Journal reported:
The rate on a 30-year fixed mortgage averaged 7.08% this week, according to a survey of lenders by mortgage giant Freddie Mac. Just seven weeks ago, the rate was below 6%. A year ago it was just over 3%.
The last time mortgage rates were this high, the dot-com bubble had recently burst. Rates were on the way down. They were in the middle of a four-decade stretch in which they mostly fell, underpinning the growth of the modern mortgage market and boosting the rate of homeownership.
Interest rates reversed sharply this year, pushed up by the Federal Reserve’s aggressive rate increases meant to curb inflation. The monthly cost of borrowing to buy a home has surged because of the additional interest buyers must pay at higher rates. That is on top of a pandemic housing boom that pushed prices up sharply.
The news comes as voters list the economy and inflation as their top issues heading into elections. Twenty-nine percent of Americans say inflation is the "most important problem" facing the nation, according to the latest polling from Reuters, while 15 percent listed jobs and the economy. The third-highest issue was gun violence, with just 8 percent of respondents selecting it.
This week, consumer confidence fell for the first time in two months but more consumers planned to buy homes despite rising rates.