US mortgage rates reach highest levels in over 20 years

US mortgage rates hit the highest level in 20 years.

• The average mortgage rate increased to 7.09% as reported by Freddie Mac.
• A year ago the rate was around 5%.
• The Federal Reserve’s high-rate policies have most directly impacted the housing market, causing a decline in refinancing and purchase activity.
• This decline has negatively affected mortgage lenders, resulting in numerous layoffs in the industry and a drag on economic growth.

Mortgage rates are mostly influenced by the 10-year Treasury yield. The high yield for the 10 year reached 4.328% today which is just below the 2022 high of 4.335%.

Ironically, despite the higher yields, the limited supply of homes available has led to increased competition among buyers, driving prices up. The median price for existing homes was over $410,000 in June, a slight decrease from the peak a year earlier but still the second-highest ever recorded. However, the number of home sales has decreased, with sales of existing homes down 19% from the previous year in June.