How High Can Mortgage Rates Possibly Go?

Higher mortgage interest rates have taken a battering ram to the housing market.

Since the start of the year, mortgage rates have more than doubled. They’ve blown past all expectations, nationally exceeding 7% by some estimates. The possibility that rates could continue to rise has struck fear into the hearts—and bank accounts—of many stressed-out homebuyers.

The simple, and dispiriting, math: Every time they tick up, fewer buyers can qualify for loans—and those that do often can afford to buy only much cheaper homes.

So how high could rates go? The answer depends largely on how the economy fares. If inflation persists, the U.S. Federal Reserve will keep raising its own interest rates and mortgage rates will likely follow suit, at least to a point. What investors do with their money as the stock market continues to falter and fears of a recession grow will also help to determine their trajectory.

“Forecasting mortgage rates is notoriously difficult,” says Ali Wolf, chief economist of building consultancy Zonda. “For example, most top economists thought mortgage rates would average about 4% this year versus the near 7% we are seeing today. Mortgage rates are driven by what investors believe the impact of Federal Reserve policy will be on the economy and inflation.”

While no one knows just what will happen with mortgage rates, most real estate experts do not expect rates to go up much from here. They were 7.12% for 30-year fixed-rate loans as of Friday afternoon, according to Mortgage News Daily.