Mortgage Rates Hitting Century Highs

With beef and diesel prices hitting record highs, can mortgage rates be far behind? In fairness, Trump would have a long way to go to match the double-digit rates baby boomers saw when they first might have been entering the housing market, but we are approaching the rates we saw at the start of this century.

My FRED chart is slightly behind the times. The Mortgage Bankers Association reports that mortgage rates hit 7.49 percent last week. That would put them only slightly below peaks hit briefly in the fall of 2023 as the highest rates since the first years of the century. 

This rise in mortgage rates is sharply reducing home buying, with purchase mortgages down 15 percent from year-ago levels. Younger households have been especially hard hit. The homeownership rate for households under age 35 fell to 35.2 percent in the second quarter, the lowest since the first quarter of 2017.

This can be seen as fallout from a combination of the AI bubble, Trump’s war on Iran, and the Trump crazy premium. Only the first is likely to end soon.