Undeniably, mortgage rates have surged this year in response to high levels of inflation. The rapid and substantial increases have been noteworthy, with the average 30-year fixed mortgage rate surpassing 7% at the close of the previous month. This marks the first time in over two decades that rates have climbed to such heights (refer to the graph below).
Freddie Mac's latest quarterly report highlights the swiftness of this rate escalation:
"Merely a year ago, rates were below 3%. This implies that while mortgage rates are not as extreme as they were in the 80s, they have more than doubled in the past year. This is an unprecedented doubling of mortgage rates within a year."
Given this unprecedented situation, it is difficult to predict with certainty the future trajectory of mortgage rates. Projecting mortgage rates is far from an exact science; however, experts concur that moving forward, these rates will continue to be influenced by inflation. Should inflation remain high, mortgage rates are likely to follow suit.