If you think Boston condo mortgage rates are high now, just wait, they can get a lot worse.
Mortgage rates could climb another 1.5 percentage points, according to a leading economist.
National Association of Realtors chief economist Lawrence Yun predicted that interest rates could be on there way to 8.5 percent, according to Bloomberg. Yun based his forecast on key levels of resistance borrowing costs will face after a key inflation indicator hit a 40-year high.
After creeping in recent months, the average rate for a 30-year fixed mortgage this week were just over 6.9 percent — a 20-year high — when Yun presented his findings at the National Association of Real Estate Investors in Atlanta.
“Today’s inflation rate report is going to test that 7 percent level,” Yun said in the presentation. “Once it’s broken, the next level of resistance is 8.5 percent, which would be another big shock to the housing market.”
Resistance refers to levels on a chart that analysts believe may cause the increase of an index price or interest rate to stall or reverse, which Yun compared it to a battlefront of two armies.
“Once one army makes a breakthrough, there’s a huge advance,” he said.
While interest rate hikes don’t always translate into higher mortgage rates, they generally follow the same trend, and there’s evidence that higher rates are quashing demand after a robust 2021.
Mortgage applications fell 14.2 percent the final week of September, according to a Mortgage Bankers Association weekly survey. The figure marked the slowest pace for mortgage applications since 1997, though some of that was due to a precipitous drop in applications in Florida following Hurricane Ian.