US mortgage rates touch 7% amid Iran war, inflation; existing home sales fall 2%
US mortgage rates have climbed toward 7% due to inflation concerns, geopolitical tensions, and rising Treasury yields. This increase, combined with high home prices, has contributed to a 2% decline in existing home sales.
Why it matters
Rising borrowing costs are cooling the US housing market and creating significant affordability challenges for prospective homebuyers.
The US housing market is facing fresh pressure as mortgage rates approach 7%, adding to affordability concerns for buyers already grappling with record-high home prices and an uncertain economic outlook.The average rate on a 30-year fixed mortgage stood at 6.76% last week, according to Freddie Mac. But daily rates have since crossed 7%, according to Mortgage News Daily, which uses a different methodology, The Wall Street Journal reported.While the 7% threshold does not by itself represent a major change in affordability, economists say it could further discourage buyers who have already been holding back from the market.“A jump in rates like this will certainly cause [prospective home buyers] to pause,” Michael Fratantoni, chief economist at the Mortgage Bankers Association, told WSJ.
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