Mortgage rates are at a 21-year high. Here’s what that means for you.
VoxAug 29, 2023
The Facts
According to data released by Freddie Mac on Thursday, US mortgage rates have hit their highest level in 21 years, with the average 30-year fixed-rate mortgage reaching 7.09% in the week ending August 17.
The average long-term benchmark rate — currently at its highest since April 2002, when it averaged 7.13% — was 6.96% last week, compared with 5.13% this time last year. The mortgage rate last exceeded 7% in November 2022, though it was still just short of last week's peak at 7.08%.
The Spin
Establishment-critical narrative
Mortgage rates are becoming crippling high and the Fed is continuing to trap American homeowners and potential homebuyers as well as ignore the impact of increased interest rates on the housing market. Consumers don't want to buy a home with a 7% mortgage, while homeowners planning to sell their property don't want to swap their 3% loan for rates that are more than twice as high. The Fed's actions are weakening the housing market, yet officials seem set on digging the hole even deeper.
Pro-establishment narrative
Despite rising mortgage rates — which do present a strain on potential homebuyers — the overall US economy is going strong and there is little chance of a recession. The battle against inflation was never going to be easy and some sectors of the economy have been hurt more than others. This pain will be short lived however as, once inflation comes under control, the Fed will lower interest rates, returning mortgage costs to normal, affordable levels.