What happens if mortgage rates go up to 8%?

Core Insights - Potential home buyers are increasingly concerned about rising mortgage rates, with fears that rates could exceed 7% and reach 8% or higher [1][5] - The Federal Reserve's recent decision to lower short-term interest rates has paradoxically led to an increase in mortgage rates, highlighting the complex relationship between Fed actions and mortgage rates [2][5] - Economic factors, including government spending and fiscal concerns, are contributing to rising bond yields, which in turn affect mortgage rates [2][4] Mortgage Rate Dynamics - A bond market sell-off could lead to a significant increase in the 10-year Treasury yield, potentially pushing mortgage rates to the 8% range [4] - Historical data indicates that mortgage rates reached 8% briefly two years ago, but there is a possibility of sustained high rates if certain economic conditions arise [8] Home Affordability Impact - Research from the National Association of Home Builders shows that at a 7% mortgage rate, 31.5 million American households could afford a median-priced home of approximately $460,000, requiring a household income of over $147,000 [6] - An increase in mortgage rates to 8% could remove about 850,000 households from the housing market, further impacting affordability [7] Market Behavior and Buyer Sentiment - There is a noticeable shift among buyers from waiting for lower rates to focusing on current affordability and recognizing market opportunities [9][10] - Buyers are advised to consider the overall financial picture, including monthly payments and long-term wealth-building, rather than solely focusing on interest rates [11]