'The pandemic boom in home sales is over’: Mortgage rates soar to highest level since 2009 as the Fed pressures the housing market

Mortgage rates are skyrocketing thanks to the Fed, but buyers who can tough out this difficult, changing market will be rewarded.

The 30-year fixed-rate mortgage averaged 5.27% for the week ending May 5, according to data released by Freddie Mac FMCC on Thursday. That’s up 17 basis points from the previous week — one basis point is equal to one hundredth of a percentage point, or 1% of 1%. Mortgage rates are roughly benchmarked to the yield on the 10-year Treasury note TMUBMUSD10Y . But the difference between the average rate on the 30-year mortgage and the 10-year Treasury has widened recently.

Lenders, consequently, must hike the rates they offer consumers so that they can continue to sell their loans to investors — those sales are what generates the funds used to produce more mortgages. Already recent housing-market data has shown the massive effect the surge in rates has had on home buyers. “The pandemic boom in home sales is over, and activity is back at pre-pandemic levels,” Mizuho Securities U.S. economist Alex Pelle and chief U.S. economist Steven Ricchiuto wrote in a research note.

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