In the first six months of the year, they're up about 100%, according to Mortgage News Daily data from June 14 showing 30-year rates at 6.23%. Data from Freddie Mac released Thursday shows rates now at 5.78%, and June 1 data from the Mortgage Bankers Association, meanwhile, still has rates at 5.33%.
The last time the latter two organizations reported mortgage rates above 6% was November 2008. Mortgage News Daily's dataset begins in 2009.
The surge is being driven by a Federal Reserve hellbent on cooling 41-year-high inflation now at 8.6%. To do this, they're hiking overnight lending rates for banks — which impact rates for mortgages, auto loan rates, credit card debt, and more — by the fastest pace in decades. On Wednesday, they hiked the federal funds rate by 75 basis points, the most since 1994.
Demand for home mortgages, as a result, is getting crushed. Mortgage applications volume is down more than 50% from this time last year, according to the Mortgage Bankers Association.
What does this mean for the future of the housing market in the near-term, which has been red hot since spring 2020?
In May, Insider asked 32 experts what what they see ahead for the housing market, and most said they don't see price declines. But the market has shifted in a month's time. Amid the sustained surge in mortgage rates and unrelenting inflation, here's what three market experts said this week about the market's near-term prospects.
Bill Adams, chief economist of Comerica Bank
Adams told Insider on Wednesday that he expects higher interest rates to continue to weigh on demand and price growth.
"I think the fever is broken for housing in the United States. The Fed rate hikes and beginning of shrinking of the balance sheet have pushed up interest rates a lot, and we're starting to see that flow through to weaker expectations of homebuilders and less foot traffic and listings, and a slowdown in mortgage applications and home sales."
Still, Adams said he doesn't see home prices dropping.
"I don't forecast an outright decline in prices," he said. "And that's because fundamental demand for housing is considerably stronger than it was prior to the pandemic because of the rise of work from home and changing lifestyles. And I think that's a change that's going to persist whether rates go up or down."
Ian Shepherdson, chief economist of Pantheon Macroeconomics
Shepherdson, meanwhile, is more bearish on the housing market in the near-term as mortgage rates rise.
In a note to clients on Wednesday, he reiterated recent calls he's made for home price declines as early as this summer.
"The 26% plunge in mortgage applications from their December peak — with no sign yet of a floor — already has pushed new home sales down to just 591,000 in April from a peak of 839,000 in December, driving up inventory to 9.0 months. That's high enough to signal that prices likely will fall over the summer, and new construction activity will drop sharply," Shepherdson said.
He added: "This is still the early stages of the housing rollover; homebuilders are not yet ready to admit that the sky is falling in. But it is."
Shepherdson, who warned in 2005 of the mid-2000s housing bubble that later burst, said in May that he expects a decline to be brief.
Alex Hermann, senior researcher at Harvard's Joint Center for Housing Studies
Hermann told Insider on Thursday that he expects home price growth to moderate, but not decline, as a result of softening demand from rising mortgage rates.
But demand hasn't fallen enough and housing supply is still too low to cause prices to drop, he said.
"Given where supply and demand fundamentals are right now, we're still incredibly constrained. Inventory is still near record and historic lows. And you'd expect home price appreciation to continue, certainly not turn negative —the caveat around that is with aggressive rate hikes you could find yourself in a broader economic downturn."
He also said that while rising mortgage rates hurt demand, they act as a further constraint on the the supply side, helping to keep prices up. This is because people will be more likely to hold onto their homes if the next home they purchase will come with a costlier mortgage.
"You're going to be reluctant to sell to take on a new mortgage when interest rates are one or even two percentage points higher," Hermann said.
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