*BIDENOMICS*
The highly popular 30-year fixed mortgage rate hit 8% on Wednesday. Interest rates soared a whopping 20 basis points this week and the 30-year fixed-rate mortgage actually hit 8% for the first time since 2000.
This means a $400,000 home with 20% down costs $1,000 per month more today than it did two years ago when the 30-year fixed rate mortgage was around 3%.
Mortgage applications fell 7% last week as interest rates continued to rise.
Some borrowers are opting to pay points to buy down the rates, Matthew Graham, COO of Mortgage Daily News said.
“Here’s another milestone that seemed extreme several short months ago,” said Matthew Graham. “The fact is that many borrowers have already seen rates over 8%. That said, many borrowers are still seeing rates in the 7s due to buydowns and discount points.”
“We did it, Joe!” – Kamala Harris
CNBC reported:
The average rate on the popular 30-year fixed mortgage rate hit 8% Wednesday morning, according to Mortgage News Daily. That is the highest level since mid-2000.
The milestone came as bond yields soar to levels not seen since 2007. Mortgage rates follow loosely the yield on the 10-year U.S. Treasury.
Rates rose sharply this week and last week, as investors digest more reads on the economy. On Wednesday, it was housing starts, which rose in September, though not as much as expected, according to the U.S. Census Bureau.
Building permits, an indicator of future construction, fell, but by a less than the expected amount. Last week, retail sales came in far higher than expected, creating more uncertainty over the Federal Reserve’s long-term plan.
More from CNBC:
The Federal Reserve last month paused rate hikes. The Fed kept the benchmark rate in the range of 5.25% to 5.50%.
For now.
“We’re prepared to raise rates further, if appropriate, and we intend to hold policy at a restrictive level until we’re confident that inflation is moving down sustainably toward our objective,” Chairman Jerome Powell told reporters in late September.
The Federal Reserve has raised interest rates 10 times for a total of 525 basis points since last year – 7 times in 2022 and 3 times in 2023 – in an effort to hedge inflation.
It’s not working.
Inflation rates are STILL high.
The higher interest rates are now posing a problem for the banking sector and the real estate market.
Silicon Valley Bank, Signature Bank and First Republic Bank collapsed this year after depositors withdrew billions of dollars from the lending institutions.
Regional bank stocks are also getting hammered amid fears of contagion.
Financial experts say the high mortgage rates are here to stay.
This story originally appeared on TheGateWayPundit
