Photo by Mortgage Rates Surge to 21-Year High: What This Means for Homeowners
The latest data from Freddie Mac reveals that mortgage rates have climbed to their highest levels in 21 years, with the 30-year fixed-rate mortgage averaging 7.09% over the week ending on Thursday. This significant increase from 6.96% the week prior marks a worrying trend for homeowners.
Image: Mortgage rates have surged to 21-year highs
The Federal Reserve’s aggressive string of interest rate hikes aimed at slashing inflation by slowing the economy and choking off demand has led to higher costs for everything from car loans to credit card debt to mortgages. Since the first rate hike in March 2022, the average 30-year fixed mortgage has more than doubled from 4.45% to its current level.
“Each percentage point increase in a mortgage rate can add thousands or tens of thousands in additional cost each year, depending on the price of the house.” - Rocket Mortgage
The rise in home-buying costs has slowed demand, but the primary cause of a stalled housing market is a lack of supply, according to Freddie Mac. As mortgage rates continue to soar, homeowners face higher costs, and the average 30-year fixed mortgage has stood above 6.5% since May.
Liz Truss Refuses to Apologize for Her Role in Mortgage Rate Rises
In a recent interview, former Prime Minister Liz Truss refused to apologize or take responsibility for the leap in mortgage rates during her short-lived premiership. When asked about the impact of her policies on mortgage rates, Truss claimed that mortgage rates have gone up across the world and that it’s wrong to suggest she’s responsible for British people paying higher mortgages.
Mortgage Blow as BoE Refuses to Cut Interest Rates
Homeowners could see their repayments rise by hundreds of pounds every month as the Bank of England refuses to cut interest rates despite a sharp drop in inflation. This will be a huge blow for millions of homeowners with mortgages, particularly the estimated 1.6 million whose low-cost fixed rates expire this year.
The average increase in mortgage payments is estimated at £500 a month, with many facing an even bigger hike and risking losing their homes if they cannot pay. As the cost of living continues to rise, homeowners are left wondering when they’ll get a break from the constant increases in mortgage rates.
