Mortgage Rates No Longer Start With a '6'

Mortgage rates just crossed a psychological threshold, and not in a good way. The average 30-year fixed hit 7.03% on Thursday, the first time in 20 months the rate has surpassed 7%, reports NPR. Economists say the development is likely to keep more would-be buyers on the sidelines and prolong a housing market that's been stuck for years, per the Wall Street Journal. Rates this high haven't been common since the early 2000s, and hopes they'd quickly retreat to the ultra-cheap pandemic era are fading. Back in late February, those hopes gained serious traction when rates fell below 6%.

"A move from 6 to 7 is a big change, and it will further dampen an already weak housing market," finance professor Stijn Van Nieuwerburgh of Columbia University tells the New York Times. For those who do buy, riskier adjustable-rate and interest-only loans are looking more appealing because of their lower initial payments, notes the Journal, though experts warn buyers need to understand the trade-offs. All this is unfolding after the spring selling season generally fizzled, thanks in part to geopolitical tensions that helped push borrowing costs back up. A hoped-for recovery in sales hasn't materialized—sales of existing homes saw a 2% decline in August from the previous month.