How High Can Mortgage Rates Go? We’re About To Find Out
Abstract
Rates blew well past 6% in a blow to buyers struggling with record-high and ever-increasing home prices. While mortgage rates are distinct from the Fed's short-term interest rates, they typically follow the same trajectory. So how much can mortgage rates possibly rise? Mortgage interest rates hit 6.28% on Tuesday afternoon and then dipped to 6.22% on Wednesday, according to Mortgage News Daily. "How high mortgage rates go depends on how high the Fed ultimately needs to raise its rates to fight inflation," says Realtor.com® Chief Economist Danielle Hale. "We've seen big jumps in rates before. Rates can change quickly." Watch: As the Housing Market Shifts, Here's What To Expect for the Rest of 2022 A year ago, rates were about 3 percentage points less, at 3.12%, taking some of the sting out of higher home prices, according to Mortgage News Daily. "They're like, 'If I don't buy a house now, I'll never get a house and I'll be stuck renting,' increasing faster than homebuying prices." Len Kiefer, deputy chief economist at Freddie Mac, pointed out that mortgage rates could be even higher. So 5% to 6% or so, "From a historic perspective, it's not a high rate at all." What happens with mortgage rates will depend on how quickly the Fed gets inflation under control or if it needs to keep wrangling it by increasing mortgage rates.