Mortgage Rates Rise to Near a 21-Year High, Says Freddie Mac

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Kathleen Marshall
Kathleen Marshall
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Kathleen Marshall has over 25 years of writing and editing experience. She is a member of the Blockchain Council and is a certified cryptocurrency expert.
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Published August 17, 2023
Freddie Mac building

Stefan Zaklin / Stringer / Getty Images

The cost of a 30-year fixed-rate mortgage (FRM) rose to 7.09% today, its highest level in 21 years, according to the Primary Mortgage Market Survey (PMMS) results released by Freddie Mac today.

Key Takeaways

  • The 30-year fixed-rate mortgage averaged 7.09% as of August 17, a level not seen since 2002.
  • In the past 21 years, 30-year fixed mortgage rates have peaked at 7.18%, hitting 7.08% as recently as November last year.
  • Higher treasury yields are pushing mortgage rates up while a low inventory of homes for sale is keeping home prices high, a double-whammy for housing affordability.
  • Experts don't expect mortgage rates to come down to levels seen since 2020, but instead anticipate a new normal environment of higher rates.

Mortgages Hit Record Rates

In the past 21 years, the weekly average of the U.S. 30-year fixed mortgage peaked at 7.18% in March 2002. This week's 7.09% rate marginally edges past the 7.08% level seen in October and November last year.

Last year at this time, a 30-year fixed-rate mortgage averaged 5.13%, and the 15-year rate averaged 4.55%.

“The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb,” said Sam Khater, Freddie Mac’s Chief Economist. “The last time the 30-year fixed-rate mortgage exceeded 7% was last November. Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales."

Pandemic Rates Were Exceptional Measure

According to Lawrence Yun, chief economist at the National Association of Realtors, the era of 3% interest rates for 30-year fixed mortgages is over.

“One can never truly predict the future, but I don’t see mortgage rates returning back to the 3% range in the remainder of my lifetime,” he told CNBC, stating that the rock-bottom rates were “an exceptional measure, during exceptionally uncertain times."

Still, there may be some relief ahead, even if only slightly. 

When asked about possible rate declines, Mark Fleming, chief economist at First American Financial Corp, said he doesn’t expect it to happen for several months. 

"Possibly in 2024, but it will depend on the Fed's decisions about raising rates in the second half of the year," says Fleming. "And even if they do go down, it won't be back to the rates of yesteryear--6% mortgage rates used to be normal, and that's more reasonable to expect, too," he told CBS News.

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  1. Freddiemac.com. “The 30-Year Fixed-Rate Mortgage Reaches its Highest Level in Over Twenty Years”

  2. CNBC.com. Mortgage rates won’t go back down to 3% in my lifetime, says real estate expert—here’s why

  3. CBS News.com. “When will mortgage interest rates drop? Here's what experts think”

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