Short answer
Mortgage rates are high because the Fed raised interest rates to fight inflation, and 30-year mortgages track long-term bond yields.
Why are mortgage rates so high?
What happened
The average 30-year fixed mortgage rate sat well above the 3% level common a few years ago.
Why it happened
Mortgages are priced off the 10-year Treasury yield plus a spread. When Treasury yields rose and lender risk premiums widened, mortgage rates roughly doubled.
Why investors care
Housing is a huge chunk of the economy. High mortgage rates freeze both buyers and sellers, slowing home sales.
How it affects ordinary people
Monthly payments on a new home are dramatically higher than in 2021. Existing owners with old low-rate mortgages are 'locked in'.
FAQ
When will mortgage rates fall?
Usually when the Fed cuts rates AND long-term inflation expectations drop.
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