On the first day of September, mortgage rates continued to rise, following the trend of the 10-year Treasury yield. According to Freddie Mac, the 30-year fixed mortgage rate inched up to 5.66% from 5.55% the previous week.
Nevertheless, rates may rise even further in the following week. It took a few days for the bond market to react. While the 10-year Treasury yield – an indicator for mortgage rates – dropped after the Fed's announcement about additional rate hikes to follow, bond yields rose in the following days as investors were digesting the Fed's policy.
In the meantime, data shows that the typical family in the U.S. can no longer afford to buy a median-priced home when mortgage rates rise over 5.7%. At that point, the typical family needs to spend more than 25% of their income on the mortgage payment. Adding other expenses such as mortgage insurance, home insurance, taxes, and expenses for property maintenance, home buying becomes burdensome for the typical family.