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 2. Personal Finance
 3. Real Estate
 4. Economic Report


ECONOMIC REPORT




U.S. MORTGAGE RATES COULD GO TO 8%

Last Updated: Sept. 22, 2023 at 10:36 a.m. ET First Published: Sept. 21, 2023 at
10:50 a.m. ET
By

AARTHI SWAMINATHAN

  comments


EXPECT MORTGAGE RATES TO FALL ONLY AFTER THE FED IS DONE RAISING INTEREST RATES
AND THE ECONOMY SHOWS SIGNS OF COOLING, ANALYSTS SAY

THE MEDIAN PRICE FOR AN EXISTING HOME IN AUGUST WAS $407,100, UP 3.9% FROM A
YEAR AGO. THAT WAS THE HIGHEST PRICE FOR THE MONTH OF AUGUST SINCE THE NATIONAL
ASSOCIATION OF REALTORS BEGAN TRACKING THE DATA.

Andrew Caballero-Reynolds/Agence France-Presse/Getty Images
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REFERENCED SYMBOLS


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TMUBMUSD10Y
4.439%


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Mortgage rates could go up to 8% after the U.S. Federal Reserve refrained from
raising interest rates again on Wednesday but forecast rates would stay high
through next year, real estate economists say.

The central bank on Wednesday announced that it was leaving its benchmark
interest rate unchanged, but a majority of officials expect another rise before
the end of the year.

With the 10-year Treasury note BX:TMUBMUSD10Y yield heading towards 4.5% on
Thursday in the wake of the Fed’s decision mortgage rates could be
“substantially higher in the short run,” Lawrence Yun, chief economist at the
National Association of Realtors, said during a press call discussing existing
home sales for the month of August.


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Don’t miss: Fed’s ‘golden handcuffs’: Homeowners with low mortgage rates don’t
want to sell

Also see: U.S. home sales fall in August to the lowest level since January

As of Thursday morning, the 10-year Treasury note yield was over 4.4%.


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“It is possible that mortgage rates may go up to 8% in the short run before by
the spring of next year retreating” as the economy cools off, he explained. Home
sales fell in August, and could drop even further if rates rise, Yun added.

With the Fed keeping another fed funds rate hike in its back pocket,
 “mortgage rates are not likely to drift lower in the absence of new data
warranting a reconsideration of the outlook,” Danielle Hale, chief economist at
Realtor.com, said in a statement. “This means that the affordability headwinds
that buyers face are likely to continue.”

Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a
unit of Dow Jones, which is also a subsidiary of News Corp. 

Expect rates to stay elevated until other economic indicators show signs of
cooling, Zillow’s Orphe Divounguy said.


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“Mortgage rates have been extremely volatile this year, as investors have been
reacting to the latest inflation and economic data depending on their
expectations about what the Fed will do next. Unfortunately, that’s likely to
continue until the end of the Fed tightening cycle,” Divounguy said in a
statement.

See: U.S. mortgage rates ‘remain anchored’ north of 7%, Freddie Mac says

Inflation readings next week “will likely lead to large swings
in mortgage rates,” he added.


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‘I’VE SACRIFICED MY CAREER’: MY HUSBAND AND I MAY DIVORCE SOON, BUT HE WILL
INHERIT $1 MILLION. HOW DO I MAKE SURE I GET HALF?

U.S. DOLLAR SCORES FIRST ‘GOLDEN CROSS’ SINCE JULY 2021, SIGNALING MORE TROUBLE
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I GAVE MY DIVORCING DAUGHTER $5,000. SHE LASHED OUT WHEN I REFUSED TO GIVE HER
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"I have provided more than $166,000 in financial assistance to my daughters
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ABOUT THE AUTHOR

Aarthi Swaminathan


Aarthi Swaminathan is a MarketWatch personal finance reporter.



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