US mortgage rates rise as Fed turns hawkish, long-term yields climb further

As the Federal Reserve turns hawkish, US mortgage rates are taking another leg up – and that’s squeezing home affordability and worsening the general cost-of-living crisis.

The average rate for a 30-year fixed mortgage recently surpassed 7% after the Fed tightened on Sept. 16. Home sellers are slashing their asking prices as a result. Bond markets are pointing to further Fed hikes ahead, adding another leg to a rate story that was already being driven by the long end of the curve and the inflationary impact of the Iran war.

Housing affordability is the worst since at least the late 1980s, with qualifying income requirements reaching record levels. Meanwhile, transactions are in a prolonged slump.