For more crisp and insightful business and economic news, subscribe to The Daily Upside newsletter. It's completely free and we guarantee you'll learn something new every day.

The last time interest rates were this high, "hanging chads" dominated national news.

US mortgage rates have climbed past 7.5% -- further tightening an increasingly impossible-to-crack housing market. Not that any evidence is needed, but a RedFin survey published Wednesday underscores just how unhappy Americans feel about the housing market.

Earning Down the House

Perhaps no sector of the economy has been rocked more deeply by the Fed's relentless interest rate hiking campaign than housing. And the prospect of future rate hikes is already pushing borrowing costs higher. On Tuesday, Mortgage News Daily pegged the 30-year fixed mortgage rate at 7.72%.

Though prospective homebuyers are frustrated, Fed Chair Jay Powell likely couldn't be happier. If higher interest rates are intended to cool spending and tamp down inflation, then things are going exactly to plan:

  • With mortgage rates creeping up to the highest levels since November 2000, mortgage applications are down roughly 22% from a year ago, their lowest rate since 1995.
  • Meanwhile, applications for adjustable-rate mortgages, which typically offer lower rates in a contract's first five to 10 years, now make up 8% of mortgage applications compared to 6.7% a month ago (breathe easy: ARMs made up nearly a third of applications in the years leading up to the housing crisis).

According to RedFin, 59% of US homebuyers now say purchasing a home is more stressful than dating. In fact, getting a divorce and finding a new job were the only two life events deemed more stressful than house shopping. We're sure this is exactly what Powell was thinking of when he began bumping interest rates.

Wall Street Negs Main Street: Even Wall Street is getting out. After pouring into the housing market during the pandemic, institutional investors are backing off. Just 0.4% of US homes were sold to large landlords, such as listed real-estate investment trusts, in the second quarter, compared to 2.4% at the end of 2021, according to John Burns Research and Consulting. That's good news for homebuyers wanting less competition, but bad news for those hoping to live next door to David Solomon.