The popular 30-year fixed mortgage rates today reached an average rate of 7.72%, as reported by Mortgage News Daily.
Mortgage rates today are tracking the yield on the 10-year Treasury, which has been rising this week due to robust economic data. These rates have not reached such heights since the end of 2000.
At the beginning of this year, the 30-year fixed rate dropped to about 6%, sparking a brief burst of activity in the spring housing market.
However, the mortgage rates began steadily rising again over the summer, leading to a drop in sales despite strong demand. The current trend suggests even higher rates, with the potential for them to surpass 8%.
Mortgage rates today impact decision-making
The Federal Reserve refrained from raising interest rates two weeks ago. Still, it signaled the possibility of another hike within this year and fewer anticipated cuts in the following year.
Investors awaited economic data results in the first week of October, while the mortgage rates today declared. This could have a significant impact on their decision-making processes.
“As we enter the first week of October, the data has shown a notable uptick in strength,” commented Matthew Graham, the Chief Operating Officer at Mortgage News Daily.
Matthew also commented on the JOTS survey report. He said the job openings and labor turnover survey is this week’s biggest and worst confirmation. And also, it is pushing yields to fresh long-term highs. It’s pretty simple stuff, even if it’s unpleasant and unfortunate for fans of low rates.
August job openings surge, mortgage rates impact economy
Notably, In August, job openings surged to 9.61 million. It marks an increase of nearly 700,000 compared to July.
This figure significantly surpassed the Dow Jones estimate of 8.8 million, as reported by the Labor Department in its monthly Job Openings and Labor Turnover Survey on Tuesday.
While the job market data showed significant growth in job openings, the mortgage rates today influence the broader economic landscape.
On the other hand, hires experienced a modest uptick, reaching 5.857 million, with an increase of just 35,000.
The majority of the increase in job openings was observed in the professional and business services sector, which saw a notable rise of 509,000 positions.
Following this report, stocks declined as a tightening labor market may exert additional pressure on the Federal Reserve to maintain elevated interest rates.
In its most recent session, the Dow Jones Industrial Average was down by over 260 points.
Quits, which indicate worker confidence in securing a new job after leaving their previous one, remained relatively stable. This was also the situation for total separations and layoffs.
Rising rates impact housing affordability and sales
Elevated mortgage rates today can severely impact affordability, impacting new and existing home sales. Builders, who previously benefited from limited existing home supply, now face significant worries due to the rise in mortgage rates.
August saw a 0.7% decline in sales of pre-owned homes compared to July, reaching an annualized rate of 4.04 million units, as the National Association of Realtors reported. This represents a 15.3% decrease from August of the previous year.
Limited supply has led to a notable increase in prices. In August, the median home price reached $407,100, marking a 3.9% year-over-year rise and the highest record price.
Sales remain particularly sluggish in the lower end of the market due to limited supply. Although sales declined across all price ranges, they remained relatively stable for homes above $1 million. And most notably increased in both the South and the Midwest within that range.
Builder sentiment dipped into negative territory in September, marking its first instance in five months.
To offer some context on rates, consider a borrower buying a $400,000 home with a 20% down payment on a 30-year fixed loan.
The current monthly payment is approximately $930 higher than when rates were at 3% during the peak of the Covid-19 pandemic.