Mortgage rates hit highest level since 2008

Increase driven by Federal Reserve's interest rate hikes

Homebuyers face higher monthly payments, reduced affordability

Mortgage rates have reached their highest level since 2008, driven by the Federal Reserve's aggressive interest rate hikes to combat inflation.

According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage is now 6.95%, up from 3.11% a year ago. This is the highest level since April 2008, when the average rate was 6.99%.

The increase in mortgage rates is making it more expensive for homebuyers to purchase a home. For example, a borrower who takes out a $300,000 loan with a 6.95% interest rate will have a monthly payment of $1,954, compared to $1,516 with a 3.11% interest rate.

The higher mortgage rates are also reducing affordability for homebuyers. According to the National Association of Realtors, the median home price in the United States is now $389,500. With a 6.95% interest rate, a borrower who puts down 20% would need an annual income of $107,000 to qualify for a loan.

The increase in mortgage rates is expected to continue in the coming months as the Federal Reserve continues to raise interest rates. This will make it even more expensive for homebuyers to purchase a home.