Mortgage Rates Rise
The average rate for the most common type of mortgage in the US has risen to almost 7.1%, according to data from a survey of lenders made by mortgage financing giant Freddie Mac. The figure—for 30-year fixed-rate loans—is the highest since December 2001 and is up two percentage points over the past year (and more than 4.4 points from the all-time low seen in January 2021).
Among other factors, mortgage rates are influenced by the Federal Reserve, which hiked the federal funds rate from 0% to 5.25-5.5% over the past year and a half in an effort to fight inflation. Higher mortgage rates mean higher costs for would-be homebuyers and tend to cause a slowdown in the housing market. Sales of existing homes dropped by almost 19% year-over-year in June, according to reports—though the median price increased to $410K, close to an all-time high.
For context, a buyer making a 20% down payment on the median-priced house would pay $465K in interest over the life of a 30-year fixed-rate mortgage (see calculator)—more than the cost of the house itself.