US Mortgage Rates Near 8%... "Raising Rates Further Is Crazy"

US 30-Year Fixed Mortgage Rate at 7.79%
Up from 7.63% Last Week... Highest Since Late 2000s

Mortgage rates in the United States have risen for seven consecutive weeks, reaching 8%. This is due to a sharp increase in Treasury yields following the Federal Reserve's (Fed) announcement of a prolonged period of high interest rates, causing borrowing costs for households and businesses to soar.

On the 26th (local time), major foreign media including The Wall Street Journal (WSJ) reported, citing Freddie Mac, a U.S. mortgage company, that the average 30-year fixed mortgage rate rose from 7.63% last week to 7.79% currently. This is the highest level since the late 2000s, and the seven-week consecutive increase marks the longest upward trend since last spring.

The average 15-year fixed mortgage rate also increased from 6.92% last week to 7.03% currently.

Sam Khater, Chief Economist at Freddie Mac, said, "Rates have risen by 2 percentage points just this year," adding, "Purchasing activity has effectively stalled, and many people are finding it difficult to afford these rate levels."

As rates rise, the U.S. real estate market is expected to be the weakest since the housing bubble burst in 2008. Existing home sales in the U.S. declined for four consecutive months through September this year. Mortgage applications have dropped to their lowest level since 1995. However, new home sales in September reached 759,000 units, exceeding market expectations by about 79,000 units.

The rise in mortgage rates is a consequence of the sharp increase in the U.S. 10-year Treasury yield, a global bond market benchmark. Following the Fed's indication of a prolonged high interest rate environment, the 10-year Treasury yield surpassed 5% last week for the first time in 16 years. Although it has since fallen to around 4.8%, it remains at a high level.

Concerns are emerging that the U.S. economy may contract in the fourth quarter due to the surge in bond yields and the cumulative effects of tightening. The U.S. third-quarter gross domestic product (GDP) was recorded as a 4.9% annualized increase compared to the same period last year, but sustaining this growth is seen as difficult. The federal government's borrowing costs are rising amid a large fiscal deficit, and higher mortgage and financing rates for households and businesses are likely to restrict consumer spending.

Paul Romer, Nobel laureate and professor of business administration at Boston College, stated in an interview with Bloomberg TV on the same day, "It is crazy for the Fed to raise rates further," and argued that "it is time to start cutting the benchmark interest rate."

This content was produced with the assistance of AI translation services.