published : 2023-08-24

Mortgage Rates Hit A 22-Year High

Record high 7.23% average rate on 30-year mortgages impedes the American Dream

A young couple considering a house for sale, exuding a mixed air of anticipation and anxiety - two emotions defining many first-time home buyers in the current market situation. Taken with a Nikon D850.

First-time homebuyers' pursuit of the American dream is becoming increasingly elusive as soaring mortgage rates and home prices put a damper on their aspirations.

Heatedly climbing, the average rate of the benchmark 30-year fixed mortgage has hit the highest peak since 2001, compounding the struggles of buyers amid an already steep affordability crisis in the housing market.

Thursday's revelation from Freddie Mac, the renowned mortgage loan company, confirms the average rate for a 30-year fixed mortgage has ascended to a staggering 7.23%—marking a second consecutive multi-decade record after last week's crest of 7.09%.

Making comparisons to previous years more daunting, this time last year, the 30-year fixed rate averaged a not-so-distant 5.55%; additionally, the rate of the 15-year fixed mortgage also showed a hike, averaging 6.55%.

Landscape shot of a suburban neighborhood, visibly lacking the usual 'For Sale' signs, emphasizing the dearth of housing inventory.  This vivid image was captured using a Canon EOS 5D Mark IV.

Sam Khater, Freddie Mac's chief economist, alluded that rates are not likely to see a decline in the foreseeable future, with continuing economic strength exerting upward pressure.

A notable factor in escalating rates is the Federal Reserve's hardline interest-rate increases, which sent mortgage rates skyrocketing.

Homeowners, who had previously seized low mortgage rates, are now hesitant to sell and risk a higher rate on a new property, diminishing the options available to incoming buyers.

Indicating a steepening crisis, as rates remain high and the supply of unsold homes devastatingly low, existing home sales are dwindling, despite a slight increase in new home sales, providing a sliver of relief to the mounting inventory conundrum.

Close-up of a woman going through mortgage application papers with visible distress, symbolizing the plight of potential homebuyers amidst soaring rates. Photographed with a Sony α7R III.

Despite mixed data on housing—with existing home sales dropping last month while new home sales and construction slightly rose—Danielle Hale, the chief economist at, suggests that the rapid surge of rates past the 7% threshold and escalating costs of buying a home are discouraging potential buyers, causing them to retreat from the market.

Additionally, the recent decline in rents might cause hopeful first-time buyers to bide their time or prolong their lease rather than rush into a daunting and costly market.