Home borrowing costs hit 23-year high 

Home mortgage rates have reached the highest figure since 2000, as the average borrowing rate for 30-year home loans topped 7.31 percent this week, mortgage buyer Freddie Mac said Thursday.

The new figure is a slight increase from last week’s 7.19 percent. A year ago it was 6.7 percent. The rate continues to climb in part due to federal efforts to ease inflation in other parts of the economy.

The rate for 15-year loans is not much better, sitting at 6.72 percent, up from 5.96 percent a year ago, Freddie Mac said.

“The 30-year fixed-rate mortgage has hit the highest level since the year 2000,” said Sam Khater, Freddie Mac chief economist. “However, unlike the turn of the millennium, house prices today are rising alongside mortgage rates, primarily due to low inventory. These headwinds are causing both buyers and sellers to hold out for better circumstances.”

High borrowing rates means that fewer people can afford to purchase homes, while sellers are also reluctant as the prices on a new home continue to increase.

The rate has continued to rise in line with the 10-year treasury yield rate, generally used to benchmark loans. The yield has climbed largely as a result of the Federal Reserve’s decision to keep interest rates high in an effort to curb inflation.

The Fed has signaled that it will keep the interest rate high into next year in an effort to slow inflation but not raise it further than its current 22-year high rate of 5.5 percent.

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