Interest rates on mortgages are on the rise, with the benchmark 30-year fixed mortgage rate increasing to 6.93 percent last week. Mortgage rates have remained above 6 percent since 2022, making it more expensive to finance a home and aggravating housing market woes.
On the eve of the pandemic, the benchmark 30-year fixed mortgage rate stood at 3.51 percent, according to the Federal Reserve Economic Data. This decreased to 2.65 percent in early January of 2021 during the Pandemic, but then rose significantly throughout 2022 to over 6 percent. The rate peaked at 7.79 percent in October of 2023, before declining to 6.08 percent in September and rising since.
Despite Fed interest rates continuing to decrease through the end of last year, mortgage rates have increased because the Federal Reserve does not directly control mortgage rates, and because of factors such as the steepening of the yield curve.
The increase in mortgage rates exacerbates issues surrounding the cost of housing in the United States. The median sales price of a house has risen from $329,000 before the pandemic to $420,400 in the last quarter of 2024. In the meantime, the median, inflation-adjusted household income decreased from $81,210 in 2019, before the pandemic, to $77,540 in 2022, before rising to $80,610 in 2023, the most recent year on record.
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