Record Breaking Rates

Most people, it would seem, are probably tired of living through record breaking days and once-in-a-lifetime events. Well, thanks to the Federal Reserve, those of us keeping score at home have yet another event to add to the history books. Tuesday, June 14, saw the biggest single leap in interest rates since the early ‘90s. 

In an effort to curb inflation, the Fed raised rates on their own short-term loans. Mortgage rates generally follow this same trajectory, so when the fed rates jumped 75 basis points (which is three-quarters of a percentage point), mortgage rates that had been hovering around the mid-fives blew past 6% and just kept right on going. This left people wondering just how high they could go. 

The Opposite of Limbo

Economists caution against freaking out too soon, as rates change often and sometimes quickly. For example, just this time last year rates were in the low-threes. Granted, this is a frustrating change for buyers who have been trying to get into the housing market and are now priced out. 

As shared by Realtor.com: about 18 million households, or 15% of all households, who could have qualified for a mortgage at the beginning of this year can no longer do so because of the higher rates, according to Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors®.

As for the question of, “how high can they go?” Remember that in 1981, mortgage rates were over 18%. While 6% may be disheartening for some, they’re nowhere near as high as they’ve been historically.