US Mortgage Loan Rates Rise Further... Highest Since 2001

Mortgage rates in the United States have soared to their highest level since 2001.

The Wall Street Journal (WSJ) reported on the 24th (local time), citing the U.S. government-sponsored mortgage company Freddie Mac, that the average 30-year fixed mortgage rate this week reached 7.23%. This is 0.14 percentage points higher than a week ago (7.09%), when it first surpassed 7% since last fall. Just two years ago, the rate was below 3%.

[Image source=Reuters Yonhap News]

The recent high mortgage rates are driven by a stronger-than-expected U.S. economy. With hopes for a soft landing and expectations that the Federal Reserve's tightening may continue, interest rates are under upward pressure. The recent rise in the U.S. 10-year Treasury yield, which influences mortgage rates, has also contributed to this trend.

WSJ noted, "The 30-year fixed mortgage rate has risen more than the benchmark U.S. Treasury yield (10-year), making it even harder for the housing market to escape a severe slowdown."

Due to the high mortgage rates, U.S. home sales have sharply declined. Earlier, the Mortgage Bankers Association (MBA) announced that mortgage applications fell 4.2% from the previous week, marking the lowest level since April 1995. Existing home sales in July also dropped 2.2% month-over-month to 4.07 million units, the lowest July figure since 2010, which is typically the peak season for home sales.

Potential homebuyers are backing out due to high rates, while existing homeowners who purchased homes with long-term fixed low rates are reluctant to list their properties in the current high-rate environment. Sam Khater, Chief Economist at Freddie Mac, described the situation as "the conveyor belt of homes entering and leaving the market has come to a halt."

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