Mortgage Rates Soar To Highest Level Since 2000, Survey Finds


Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.

The average interest rate for 30-year, fixed-rate mortgages has soared to a level not seen since the turn of the millennium, according to the latest Freddie Mac mortgage rate survey.
As of September 28, the 30-year rate averaged 7.31%, the survey says. Freddie Mac data shows the last time the 30-year rate exceeded that figure was December 15, 2000, when the average rate clocked in at 7.42%.
“The 30-year, fixed-rate mortgage has hit the highest level since the year 2000,” said Sam Khater, Freddie Mac’s chief economist. “However, unlike the turn of the millennium, house prices today are rising alongside mortgage rates, primarily due to low inventory. These headwinds are causing both buyers and sellers to hold out for better circumstances.”
What Are the Current Mortgage Rates?

The rate for a 30-year, fixed-rate mortgage averaged 7.31% as of September 28, up from 7.19% the previous week. A year ago at this time, the rate averaged 6.7%.
The average rate for a 15-year, fixed-rate mortgage was 6.72% as of September 28, up from 6.54% a week earlier. At this time a year ago, the rate averaged 5.96%.

Figures for the weekly mortgage rates survey come from conventional mortgage applications submitted to lenders across the U.S. and then sent to Freddie Mac. The company buys mortgages and packages them as mortgage-backed securities.

Mortgage Demand Slips
In tandem with a spike in mortgage rates and Treasury bond yields, mortgage application activity recently dipped, according to the latest survey from the Mortgage Bankers Association, or MBA.
For the week ending September 22, the number of mortgage applications fell 1.3% compared with the previous week and fell 25.6% from the same time a year ago.
“Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week,” said Joel Kan, MBA’s vice president and deputy chief economist.
Historically, rates for 30-year mortgages and 10-year Treasury bond yields follow similar up-and-down paths. They typically move in the same direction because mortgage-backed securities and Treasury bonds vie for the same pool of investors.
Kan noted that based on new economic projections from the Federal Reserve’s rate-setting committee, “rates are expected to be higher for longer, which drove the increase in Treasury yields.”
MBA data shows the average rate for a 30-year, fixed-mortgage rate rose to 7.41%, the highest level since December 2000, from 7.31% the previous week. MBA relies on rate data that differs from Freddie Mac’s rate data.
Sales of New Homes Sink 8.7%, Government Report Says
Evidence of the impact of stubbornly high mortgage rates is everywhere. For example:

Sales of new homes tumbled 8.7% in August from the previous month, the federal government reported.
Sales of existing homes decreased 0.7% from the previous month, according to the National Association of Realtors.

“Today’s housing market is characterized by the tension between buyers and sellers, as both parties consider their response to climbing mortgage rates and still-high home prices,” said Hannah Jones, senior economic research analyst at
Higher Interest Rates Fuel Bigger Mortgage Payments
High interest rates also have contributed to bigger mortgage payments.
A September 27 report by the Consumer Financial Protection Bureau found the average monthly payment (excluding taxes and insurance) for a typical 30-year, fixed-rate mortgage jumped by almost half—46.1%—from December 2021 to December 2022. At the end of 2021, the average was $1,400; in late 2022 it was $2,045. At the end of last year, the average rate for a 30-year, fixed-rate mortgage was 6.42%, according to Freddie Mac.
“The higher interest rate environment had profound effects on the mortgage market in 2022, with borrowers paying much more in monthly payments,” said Rohit Chopra, the bureau’s director. “These trends are likely to continue given further increases in interest rates in 2023.”

Find the Best Mortgage Lenders of 2023

See the full article on mortgage interest rates, or, read more Arizona real estate investing news.