The average long-term mortgage in the United States this week exceeded 7% for the first time in more than two decades, the result of the Federal Reserve’s aggressive policy of raising interest rates to control inflation.
Mortgage provider Freddie Mac reported Thursday that the 30-year median rate rose to 7.08% from 6.94% the previous week. The last time the average rate was above 7% was in April 2002, a time when the United States was still feeling the effects of the terrorist attacks of 9/11, but six years after the housing market collapse. triggered the Great Recession.
A year ago, 30-year mortgage rates were on average 3.14%.
The Fed has raised the benchmark rate five times this year, including three consecutive hikes of 0.75 percentage points which took the short-term rate to a range of between 3% and 3.25%, the highest level. high since 2008. At their September meeting, central bank officials predicted that early next year the rate would be around 4.5%.
Mortgage rates do not necessarily reflect Fed rate hikes, but tend to follow the 10-year Treasury yield. This is influenced by a number of factors, including investor expectations for future inflation and global demand for US Treasuries.