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Saturday, Oct 24, 2026

US long-term mortgage rates hit highest level since 2008

US long-term mortgage rates hit highest level since 2008

One year ago, 30-year mortgage rates in the United States stood at 2.88 percent.

Average long-term United States mortgage rates jumped again this week, hitting the highest levels in almost 14 years and pushing even more would-be buyers out of the market.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate jumped to 5.89 percent from 5.66 percent last week. That’s the highest the long-term rate has been since November of 2008, just after the housing market collapse set off the Great Recession. One year ago, the rate stood at 2.88 percent.

The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, rose to 5.16 percent from 4.98 percent last week. That’s the first time the 15-year rate has been above 5 percent since 2009, as the real estate market went into a years-long slump. Last year at this time, the rate was 2.19 percent.

Rising interest rates — in part a result of the US Federal Reserve’s aggressive push to tamp down inflation — have cooled off a housing market that has been hot for years.

Many potential homebuyers are getting pushed out of the market as the higher rates have added hundreds of dollars to monthly mortgage payments. Sales of existing homes in the US have fallen for six straight months, according to the National Association of Realtors.

Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. That’s influenced by a variety of factors, including investors’ expectations for future inflation and global demand for US Treasurys.

On Thursday, Federal Reserve Chair Jerome Powell reiterated that the Fed is determined to lower inflation, now near a four-decade high of 8.5 percent, by raising its short-term rate, which is in a range of 2.25 percent to 2.75 percent, even if its efforts weaken the economy and the job market as a consequence.


Inflation and mortgage rates


The Fed has raised its benchmark short-term interest rate four times this year, and Fed Chair Powell has said that the central bank will likely need to keep interest rates high enough to slow the economy “for some time” in order to tame the worst inflation in 40 years.

Many potential homebuyers are getting pushed out of the market as the higher rates have added hundreds of dollars to monthly mortgage payments


The last time the Federal Reserve faced inflation as high as it is now, in the early 1980s, it jacked up interest rates to double-digit levels — and in the process caused a deep recession and sharply higher unemployment. On Thursday, Powell suggested that this time, the Fed won’t have to go nearly as far.

“We think we can avoid the very high social costs that Paul Volcker and the Fed had to bring into play to get inflation back down,” Powell said in an interview at the Cato Institute, referring to the Fed chair in the early 1980s who sent short-term borrowing rates to roughly 19 percent to throttle punishingly high inflation.

The government reported that the US economy shrank at a 0.6 percent annual rate from April through June, a second straight quarter of economic contraction, which meets one informal sign of a recession. Most economists, though, have said they doubt that the economy is in or on the verge of a recession, given that the US job market remains robust.

Applications for jobless aid fell last week to their lowest level since May, despite the Fed’s moves to tame inflation, which usually tends to cool the job market as well.

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