Mortgage rates are now the highest they have been in more than two decades, thanks to the Federal Reserve's efforts to counteract the historic bout of inflation, hurting affordability and threatening the market.
As of Thursday, the average rate on a 30-year fixed-rate mortgage was 7.09%, more than double the average before the Fed started raising interest rates, according to Freddie Mac. Mortgage rates are now higher than their peak in November when they topped out at 7.08%. The last time rates were this high was March 2002, according to the Freddie Mac data.The average rate on a 15-year, fixed-rate mortgage is now clocking in at 6.46%.
The Fed has been raising interest rates since March 2022 and has hiked its rate target from near-zero all the way to 5.25% to 5.50%, the highest it has been since the dot-com bubble. While many characterized the housing market as being in a recession last year — and home prices even fell for a bit — recent data show that the situation is a bit more complicated. Housing prices have started rising again as people refuse to sell their existing homes because they are locked into the ultra-low pandemic bargain rates.
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