Current:Home > MarketsMortgage rates continue to climb — and could reach 8% soon-Angel Dreamer Wealth Society D1 Reviews & Insights
Mortgage rates continue to climb — and could reach 8% soon
View Date:2024-12-23 14:59:56
Even though mortgage rates have already reached their highest point in 20-plus years, there's a chance they could climb even higher — even as high as 8%. It all depends on how the Federal Reserve decides to tackle stubborn inflation in the next few months, economists told CBS MoneyWatch.
Fed officials said they believe high inflation is still enough of a threat to the U.S. economy to possibly warrant additional interest rate increases to help combat the issue, according to minutes released this week from their July policy meeting.
Should the Fed decide to raise rates again at its next meeting in September, it would be the 12th in 18 months and could mean even higher costs for homebuyers.
Mortgage rates don't necessarily mirror the Fed's rate increases, but tend to track the yield on the 10-year Treasury note. Investors' expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates can influence rates on home loans.
Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already deemed unaffordable to many Americans.
Historical mortgage rates
A recent survey from Bankrate found that one-third of respondents who aspire to buy a home say high mortgage rates are holding them back. But in past decades, homebuyers faced even steeper loan rates.
"High rates are challenging for homebuyers, but it's worth noting that Americans bought homes before the recent era of super-low rates," said Jeff Ostrowski, a Bankrate analyst. "In one oft-cited example, mortgage rates went as high as 18% in the early 1980s, and buyers still found ways to get deals done."
Why are mortgage rates so high?
If the Fed raises rates again, mortgage lenders will likely respond by either raising their rates or keeping them closer to today's roughly 7.2%, economists said.
The Fed's regime of interest rate hikes began in March 2022 as a way to cool the hottest inflation in four decades, as consumers and businesses tend to cut back on buying homes and other purchases when borrowing costs are higher.
"If the 30-year-fixed mortgage rate can hold at a high mark of 7.2%, and the 10-year yield holds at 4.2%, then this would be the high for mortgage rates before retreating," said Lawrence Yun, chief economist at the National Association of Realtors (NAR). "If it breaks this line and easily goes above 7.2%, then the mortgage rate could reach 8%."
An average 8% on home loans would be sour news for homebuyers, many of whom already faced a challenging market this summer with fewer homes available and higher asking prices. The national median home price hit $402,600 in July, up from $359,000 at the start of 2023, and the typical mortgage on a single-family home is now $2,051 compared with $1,837 a year ago, according to NAR.
Yun said 8% mortgage rates would bring the housing market to a halt and may even sink asking prices.
— The Associated Press contributed to this report.
- In:
- Mortgage Rates
- Housing Crisis
Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.
TwitterveryGood! (15)
Related
- Candidates line up for special elections to replace Virginia senators recently elected to US House
- Ashlyn Harris Shares Insight Into “Really Hard” Divorce From Ali Krieger
- Man gets 3 years in death of fiancée who went missing in Ohio in 2011
- Funds to Help Low-Income Families With Summer Electric Bills Are Stretched Thin
- Horoscopes Today, November 12, 2024
- Montana’s largest nursing home prepares to close following patient safety violations
- Lara Trump says Americans may see a different version of Donald Trump in speech tonight
- FACT FOCUS: Heritage Foundation leader wrong to say most political violence is committed by the left
- Vermont man is fit to stand trial over shooting of 3 Palestinian college students
- Hello Kitty Is Not a Cat and We're Not OK
Ranking
- Pedro Pascal's Sister Lux Pascal Debuts Daring Slit on Red Carpet at Gladiator II Premiere
- Video tutorial: How to use ChatGPT to spice up your love life
- Yoga, meditation and prayer: Urban transit workers cope with violence and fear on the job
- Boxer Ryan Garcia has been charged for alleged vandalism, the Los Angeles DA announced
- Anti-abortion advocates press Trump for more restrictions as abortion pill sales spike
- Body of autistic 3-year-old boy found after he went missing from resort near Disney
- This poet wrote about his wife's miscarriage and many can relate: Read 'We Cry, Together'
- Idaho inmate who escaped after hospital attack set to be sentenced
Recommendation
-
Ben Foster Files for Divorce From Laura Prepon After 6 Years of Marriage
-
Jury returns mixed verdict in slaying of Detroit synagogue leader Samantha Woll
-
Lou Dobbs, conservative pundit and longtime cable TV host for Fox Business and CNN, dies at 78
-
Obama’s dilemma: Balancing Democrats’ worry about Biden and maintaining influence with president
-
California man allegedly shot couple and set their bodies, Teslas on fire in desert
-
How Travis Barker Is Bonding With Kourtney Kardashian's Older Kids After Welcoming Baby Rocky
-
Dance Moms: A New Era's Dramatic Trailer Teases Tears, Physical Fights and More
-
Netflix is ending basic $11.99 plan with no ads: Here's which subscription plans remain