Mortgage Rates Reach Highest Level Since 2000

Ladies and gentlemen, gather ‘round and brace yourselves to travel into the mystical realm of real estate…

The average 30-year fixed-rate mortgage reached 7.8% this week - the highest level since 2000.

If you’re picturing a bunch of bank executives in capes, cackling maniacally as they raise interest rates, you’re not alone. The incredibly sharp rise in mortgage rates has left prospective buyers shocked.

In fact, mortgage demand is at its lowest levels since 1995:

The MBA Purchase Index includes all mortgage applications for the purchase of a single-family home.

Why is this happening?

Two main reasons:

1. The Federal Reserve’s hawkish view and rising interest rates.

2. Mortgage rates and the 10-year yield are closely related. And the 10-year Treasury yield is reaching levels it hasn’t seen since 2007. Rising 10-year yield = Rising mortgage rates.

But this is only half the problem. There is also a lack of supply. Homeowners who have locked in low rates don’t want to sell and lose their current rate, leaving little inventory for those looking to buy.

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