Record Low Mortgage Rates Spark Surge in Homebuying Demand

Mortgage demand has dropped to its lowest level in almost three decades as the average long-term mortgage rate approaches 8%. The average rate on a 30-year home loan climbed to 7.53%, the highest since 2000. The higher rates add significant costs for borrowers, limiting affordability in an already unaffordable market. Homeowners with low rates are discouraged from selling, exacerbating the lack of housing supply. In response, applications for adjustable-rate mortgages have increased. The rise in mortgage rates is tied to the increase in the 10-year Treasury yield, which could keep inflation pressure high and interest rates elevated. As a result, home sellers are slashing prices to attract buyers, with some facing losses in major cities like San Francisco and New York.