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Opinion
Brian Chappatta

Just How Much Will Soaring U.S. Mortgage Rates Bite?

The 3.56% average rate for a 30-year loan is the highest since March 2020, but the lure of surging real estate prices might keep buyers piling into the housing market.

Homebuyers will face not just the highest prices in history but will have to pay a rising monthly rate as well.

Homebuyers will face not just the highest prices in history but will have to pay a rising monthly rate as well.

Photographer: Luke Sharrett/Bloomberg 

U.S. interest rates are soaring and potentially signaling the end of an era. For financial markets, higher benchmark Treasury yields are encouraging a swift rotation away from expensive growth stocks and into shares of companies with more stable cash flows. For the broader economy, it’s a return to something resembling normal after the Federal Reserve slashed the cost of borrowing to record lows in the wake of the Covid-19 pandemic.

One area where Wall Street and Main Street converge is the red-hot U.S. housing market. The latest Freddie Mac data released Thursday showed the average 30-year mortgage rate increased 11 basis points to 3.56%, the highest since March 2020 and the fourth consecutive weekly jump. The move follows a lurch higher in 10-year Treasury yields as bond traders price in more aggressive Fed policy tightening.