Mortgage Rates Have Hit 7% for the First Time in 20 Years. How Buyers Can Cope | NextAdvisor with TIME The last time mortgage rates were this high, a gallon of gas cost $1.37, George W. Bush was in the White House and “Friends” was on Thursday nights. The average 30-year mortgage rate was 7.12% this week — over 7% for the first time since April 2002 — according to Bankrate, which like NextAdvisor is owned by Red Ventures. A similar survey by the government-sponsored Freddie Mac put the average at 7.08%, also eclipsing 7% for the first time since April 2002. For homebuyers, the big jump in mortgage rates has been dramatic and unsettling. Alongside rising home prices, the cost to buy a house has risen massively in a short period of time. The monthly payment on the typical house is up 60-90% compared to a year ago, says Ali Wolf, chief economist at Zonda, a home construction data firm. The next big test comes next week, when the Federal Reserve announces its next rate adjustment. What the Fed announces isn’t expected to be much of a surprise — most experts anticipate a fourth consecutive increase of 75 basis points to the federal funds rate — but the central bank’s messaging could be significant.
7% seems ridiculous after 15 years of 3-4% rates, but it’s back to where it was pre-housing bust. And Much lower than the long term average…
People are used to lower rates though and therefore, rates will have to come down before people start buying and selling houses again in mass quantity. Few people want to give up their 3% 30 year fixed to pay an inflated price and finance at 7%. Hard to blame them.
I agree that people don’t want to give it up …. but the reason we had 3% rates is because the fed hovered around 0% for a lot of the last 15 years. Thats not really practical, either. I can’t predict who is going to blink first, the fed or homebuyers… but my guess is homebuyers. People need homes….
Oh, I think the current Fed is trying to destroy housing. It's the easiest way for them to destroy wealth, which in turn curbs demand, which is what they are seeking in order to bring down inflation. The Fed went too far and are now scrambling like bats out of hell to cover up their grand mistake.
We coped when they were 14%, I imagine they can take their participation trophy to a smaller house vs Mom’s garage
My father in law likes to tell me about buying their first house in the 80s at 15%. And I tell him, yeah, but your house was like 30,000 dollars....
What's amazing to me is that we still have a housing shortage with the values being what they are and how much they've risen. This actually extends back before Covid. Builders are simply not stepping up to the plate to meet the demand of the population growth in our country.
So was Reagan responsible for the 14% rate that we paid when we bought our first (and actually only) single family home in 1983?
