The Average 30-Year Mortgage Rate Just Reached a Level Not Seen in Well Over a Decade

Buyers might now really struggle to purchase homes.

These days, home prices are sky-high thanks to a limited amount of real estate inventory and a high level of buyer demand. That's bad enough. But what's been making matters worse for buyers is the fact that mortgage rates have been rising dramatically since the start of the year. And now, they just reached a level not seen since 2008.

The average 30-year mortgage rate is over 6%

At the start of 2022, the average 30-year mortgage rate was around 3%. Now, it's averaging 6.13%. That's an extremely drastic change in such a short period of time. And there's concern that rising mortgage rates will cause a huge amount of buyer pullback, sending home prices plunging.

In fact, mortgage application volume is half of what it was a year ago. And if rates keep climbing, home loan demand could decrease even more.

Now, because housing inventory is still so low, a full-fledged real estate market crash isn't likely to happen. But as buyers say no to these higher borrowing rates, home prices could steadily start to drop to more moderate levels. That could give buyers some relief -- but only a limited amount given where mortgage rates are sitting.

Is it possible to save on a mortgage?

Clearly, it costs a lot more to finance a home today than it did at the start of the year. And that's really unfortunate for home buyers on a budget. But there are some steps buyers can take to lock in a lower interest rate on a home loan.

First, those with higher credit scores might reap some savings. Mortgage lenders tend to reward applicants with strong credit with lower borrowing rates since they're considered less of a risk.

Consumers with less-than-stellar credit can work on raising their scores by paying all bills on time and whittling down credit card balances. Checking credit reports for errors -- and correcting any issues -- could also help consumers give their credit scores a much-wanted boost.

Also, signing a shorter-term loan could result in a lower mortgage rate. However, given where home prices are at today, many buyers can't afford the higher monthly payments that might come with a 15- or 20-year loan.

Will mortgage rates continue to climb?

The Federal Reserve is meeting Wednesday and is expected to raise interest rates again in its efforts to cool inflation. As such, consumer borrowing rates are expected to climb across the board, and that extends to mortgage rates.

As such, buyers who are having a hard time finding an affordable home right now may want to put their plans on hold until home prices start to come down. It looks like higher mortgage rates could be here to stay for a while. But the combination of costlier mortgages and overpriced homes just isn't a favorable one for buyers at all. Those who are willing to pause their plans may find that it's easier to buy a home in a year, once housing inventory hopefully picks up and drives home prices downward.