Mortgage rates top 7% for the first time since 2002

Oct 27, 2022, 10:30 AM

A view of houses in a neighborhood in Los Angeles, California, on July 5, 2022. - While two years o...

A view of houses in a neighborhood in Los Angeles, California, on July 5, 2022. - While two years of a booming US housing market brought wealth to many, a shortage of housing is making home ownership unaffordable for millions of Americans with prices up more than 30% over the past few years and interest rates rising. (Photo by Frederic J. BROWN / AFP) (Photo by FREDERIC J. BROWN/AFP via Getty Images)

(Photo by FREDERIC J. BROWN/AFP via Getty Images)

(CNN) — Mortgage rates rose again this week, topping 7% for the first time since 2002.

The 30-year fixed-rate mortgage averaged 7.08% in the week ending October 27, up from 6.94% the week before, according to Freddie Mac. A year ago, the 30-year fixed rate stood at 3.14%.

The last time the average rate surpassed 7% was in April 2002.

Mortgage rates have risen almost every week since late August and have more than doubled since the beginning of the year.

The rapid rise has been fueled by the Federal Reserve’s unprecedented campaign of hiking interest rates in order to tame soaring inflation. The combination of the central bank’s rate hikes, investor’s concerns about a recession and mixed economic news has made mortgage rates increasingly volatile over the past several months.

The rising rates are leading to stagnation in the housing market, said Sam Khater, Freddie Mac’s chief economist.

“As inflation endures, consumers are seeing higher costs at every turn, causing further declines in consumer confidence this month,” said Khater. “Many potential homebuyers are choosing to wait and see where the housing market will end up, pushing demand and home prices further downward.”

The Utah angle: Rising interest rates put homes out of reach for 2 of 3 Utah families

The average mortgage rate is based on a survey of conventional home purchase loans for borrowers who put 20% down and have excellent credit, according to Freddie Mac. But many buyers who put down less money up front or have less than perfect credit will pay more.

Inflation remains stubborn

While the Fed does not set the interest rates borrowers pay on mortgages directly, its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds. As investors see or anticipate rate hikes, they make moves which send yields higher and mortgage rates rise.

This week the 10-year yield remained above 4%, a level last seen in 2008.

Investors are anticipating another rate hike at next week’s Fed meeting, said Hannah Jones, economic data analyst at

Analysts expect the central bank to announce another 75-basis-point hike since the most recent inflation data has not shown sufficient signs of cooling. If that happens, it will be the fourth 75-basis-point hike in a row, marking the largest series of Fed rate hikes in more than three decades.

Affordability continues to take a hit

Higher mortgage rates are making it even harder for prospective buyers to afford a home.

Over the past year, mortgage rates have climbed nearly four percentage points and listing prices have increased 13.9%. That has made the monthly payment on a median priced home close to 75% higher today compared to one year ago, according to

At this time last year, a buyer who put 20% down on a $390,000 home and financed the rest with a 30-year, fixed-rate mortgage at an average interest rate of 3.14% had a monthly mortgage payment of $1,339, according to calculations from Freddie Mac.

Today, a homeowner buying the same priced house with an average rate of 7.08% would pay $2,093 a month in principal and interest. That’s $754 more each month.

“Home shoppers are hamstrung by the rising cost of homeownership and inflation, which has led many to drop out of the market,” said Jones. She pointed to the recent report on existing home sales, which declined 23.8% year-over-year in September marking the eighth consecutive month of slowing, according to the National Association of Realtors.

Demand for mortgages has dropped dramatically as well, with applications at their slowest pace since 1997, according to the Mortgage Bankers Association.

Homebuyers who remain on the hunt are finding homes they can afford in lower priced markets, Jones said. “As a result, affordable markets are seeing sustained housing demand.”

But as long as mortgage rates and prices remain high, Jones said, many buyers will remain on the sidelines or downsize their expectations.

“Some may find renting to be the better option in the short term, while others may consider other home types such as condos,” said Jones. “Buyers who remain in the market may see lower prices and have some leverage relative to the last few months, though they will have to be cognizant of how higher mortgage rates impact housing costs.”

™ & © 2022 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

Business + Economy

Almost half of working Americans say they feel good about their finances, for now. They're feeling ...

Alexandrea Bonilla

Working Americans are worried about their future finances

Almost half of working Americans say they feel good about their finances, for now. They're feeling unsure about the future.

3 days ago

A newly implemented city regulation in Washington DC is making the city and childcare even more exp...

Devin Oldroyd

New law raises Washington DC childcare cost and affects childcare staff

A newly implemented city regulation in Washington DC is making the city and childcare even more expensive and unsustainable for families.

4 days ago

Financial technology, or FinTech is a new minor offered at the University of Utah. This year, they ...

Josuee Sanchez

Graduates from U’s FinTech program join a popular, growing field

FinTech grads will fill roles in businesses that include digital banking, blockchain technology, and artificial intelligence.

4 days ago

housing in rural utah...

Heather Peterson

New report explores similarities and differences in rural and urban Utahns

Researchers analyzed Census data, which showed that people in Utah’s urban and rural communities shared surprising similarities.

4 days ago

a utah child care provider and several children...

Amanda Dickson

Dickson: A look inside the child care crisis

You've heard about the child care crisis in Utah. Parents can't afford child care. Child care workers can't afford to live on what they make.

5 days ago

Rural wildlife firefighters, "Hot Shots"...

Michael Camit

Utah is struggling to retain its rural ‘Hotshots’

Filling jobs of rural wildlife firefighters can be difficult due to the cost of living according to the Utah Division of Forestry, Fires and State Lands.

7 days ago

Sponsored Articles

a doctor putting her hand on the chest of her patient...

Intermountain Health

Intermountain nurse-midwives launch new gynecology access clinic

An access clinic launched by Intermountain nurse-midwives provides women with comprehensive gynecology care.

Young couple hugging while a realtor in a suit hands them keys in a new home...

Utah Association of Realtors

Buying a home this spring? Avoid these 5 costly pitfalls

By avoiding these pitfalls when buying a home this spring, you can ensure your investment will be long-lasting and secure.

a person dressed up as a nordic viking in a dragon boat resembling the bear lake monster...

Bear Lake Convention and Visitors Bureau

The Legend of the Bear Lake Monster

The Bear Lake monster has captivated people in the region for centuries, with tales that range from the believable to the bizarre.


Live Nation Concerts

All the artists coming to Utah First Credit Union Amphitheatre (formerly USANA Amp) this summer

Summer concerts are more than just entertainment; they’re a celebration of life, love, and connection.

Mother and cute toddler child in a little fancy wooden cottage, reading a book, drinking tea and en...

Visit Bear Lake

How to find the best winter lodging in Bear Lake, Utah

Winter lodging in Bear Lake can be more limited than in the summer, but with some careful planning you can easily book your next winter trip.

Happy family in winter clothing at the ski resort, winter time, watching at mountains in front of t...

Visit Bear Lake

Ski more for less: Affordable ski resorts near Bear Lake, Utah

Plan your perfect ski getaway in Bear Lake this winter, with pristine slopes, affordable tickets, and breathtaking scenery.

Mortgage rates top 7% for the first time since 2002