US Mortgage Rates Breach 7%

Facts

• The average contract rate on a 30-year fixed-rate mortgage rose to 7.16% for the week ending Oct. 21, up 22 basis points from the week before and the highest level since 2001, according to Wednesday's data from the Mortgage Bankers Association (MBA).¹
• Mortgage rates have more than doubled since the start of the year as the Federal Reserve (Fed) has continued its plan of reining in inflation by aggressively raising interest rates.²
• In contrast to the increasing mortgage rates, MBA’s Market Composite Index, which measures the number of mortgage applications, fell 1.7% from a week earlier, with mortgage application activity at its slowest pace since 1997.¹
• Purchase applications followed this trend and declined 2%, more than 40% behind last year’s pace and the slowest pace since 2015.³
• Although the Fed doesn’t directly set mortgage rates, the housing market is susceptible to interest rate hikes. Many analysts expect the Fed to hike rates twice more in 2022.⁴

Sources: ¹Guardian, ²Business Insider, ³FOX News and ⁴CBS.

Narratives

• Republican narrative, as provided by Townhall. After nearly two years under Biden, the US economy is being driven into a ditch — a very real phenomenon that the president is blind to, as evidenced not only by his lack of appropriate action but also by his misplaced and reckless spending. The only way out is through a Republican return to power, which looks more and more promising as next month’s midterms approach.
• Democratic narrative, as provided by New York Times. Rather than offering tangible solutions, the opposition is playing the blame game, an easy thing to do outside of power. Their proposed solutions are nothing more than unattainable promises — which economists from both sides of the political spectrum have questioned — to score political points.