Mortgage rates hit 7.9%, the highest level in more than 20 years.

This Thursday, the Federal Mortgage Lending Corporation Freddie Mac revealed in its latest report that the average rate on 30-year fixed mortgages reached 7.09% this week.which is the highest figure in more than 20 years.

According to Sam Hater, chief economist at Freddie Mac, “The economy continues to perform better than expected, and 10-year Treasury yields have risen. which caused mortgage rates to rise. Demand has been hit by affordability issues, but low inventory levels remain the main reason for stagnating home sales,” he said.

This data exceeds the data presented in November last year, when it reached 7% and remains above 6.96% last week. According to the analysis, the 15-year fixed mortgage rate also increased to 6.46% compared to 4.55% last year.

Impact of high interest rates

Inflation has jumped to its lowest point since last year, although the Federal Reserve’s aggressive monetary policy has paid off, causing a slow but gradual slowdown in inflation. High interest rates have also affected other areas such as labor and real estate markets.

Now that mortgage rates are high and inventory is tight, many homeowners are reluctant to sell their properties, and some buyers are waiting for better times to accept more affordable offers.

Realtor.com also recently filed a report stating that for the month of June available home inventory decreased by 47%. It comes as no surprise to economist Chiayi Xu that mortgage rates will remain high in the coming months.

“Despite still high prices and higher interest rates, retail sales data for July showed that consumer spending continues to rise strongly as demand is driven by strong wage growth. While this strong data could ease worries about a looming recession, they could raise fears that interest rates could remain elevated for an extended period,” he said.