Mortgage rates had already been trending higher over the past several months. In response to the coronavirus pandemic, the Federal Reserve slashed the federal funds rate this spring, pushing borrowing costs for mortgage rates to all-time lows. However, ever since the end of the summer, mortgage rates have started to tick higher.
This week, the 30-year mortgage rate rose above 7.48%, which is the highest rate since 2000. The rates are likely to keep climbing in the near future as the US economy continues to recover and inflation concerns rise.
The increase in the mortgage rate is likely to impact the housing market. Experts expect mortgage rates to have an effect on the affordability of buying a house, as well as the size of the mortgage some borrowers would be able to afford. That could lead to fewer people being able to buy a home or choosing to buy a smaller one.