Market history · Real estate ·
US mortgage rates reach a twenty-year high
On 17 August 2023 Freddie Mac reported that the average 30-year fixed mortgage rate in the United States had risen to 7.09%, its highest level in over twenty years. The rate had last been above 7% the previous November.
The rise followed the Federal Reserve's rate increases and a jump in long-term bond yields, which feed into mortgage pricing. Higher borrowing costs reduced the number of homes sold and discouraged owners with cheaper existing mortgages from moving, and they also weighed on commercial property, where values depend on financing costs.
It illustrated how directly interest rates pass into the price and volume of real estate transactions.
The takeaway
Property is a leveraged asset class. The cost of debt moves values and sales volumes quickly.
This is a retrospective about a past event, provided for general information. It is not investment advice, does not describe RockLake's positioning at the time, and past performance is not a guide to future performance. Read the risk warning.