Mortgage rates hit close to eight percent in ‘unfortunate blow’ to homeowners

Mortgage rates in the US are skyrocketing close to eight percent, according to new figures. The Mortgage News Daily reports that the average rate on the popular 30-year fixed mortgage rose to 7.72 percent.

Mortgage demand has plummeted amid the steady rise in interest rates.

Rates loosely follow the the yield on the 10-year Treasury which has risen this week after strong economic figures.

It should be noted that mortgage rates for Americans have not been this high in over 20 years.

Earlier this year, 30-year fixed-rate mortgage rates fell to around six percent which resulted in a rebound in the property market in spring.

However, the rate began to once again rise over the last couple of months which caused house sales to fall.

At its current trajectory, mortgage rates are expected to exceed eight percent without intervention.

In response to rising inflation, the Federal Reserve has raised interest rates multiple times to bolster the economy.

Two weeks ago, the central bank made the decision to pause putting up rates but indicated further hikes could take place in the future.

If a borrower were to purchase a $400,000 home with a 20 percent down payment as part of a 30-year fixed loan, they would pay a lot more than they would prior to the pandemic.

Monthly mortgage repayments would be around $930 more than if rates had remained at three percent.

Matthew Graham, the chief operating officer at Mortgage News Daily, outlined what is at stake for homeowners.

The property market expert explained: “It is now the first week of October, and data has been stronger.

“This morning’s JOLTS (job openings and labor turnover survey) is the biggest, baddest confirmation so far this week, and it’s pushing yields to fresh long-term highs.

“Pretty simple stuff, actually, even if unpleasant and unfortunate for fans of low rates.”