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Mortgage rates top 7% for first time since April 2002

Mortgage rates surpassed 7% for the first time since April 2002, adding more reason for price-struck homebuyers to stay on the sidelines.

The rate on the average 30-year fixed mortgage hit 7.08%, up from 6.94% the week prior, according to Freddie Mac. Rates have jumped 3.86 percentage points since the start of the year, the largest year-to-date increase in over 50 years.

The dramatic increase in rates – driven by the Federal Reserve’s aggressive fight on inflation – has crushed homebuyer demand, while home sellers continue to lose confidence as price reductions become more common.

“With mortgage rates and inflation continuing to put pressure on homebuyers, demand will remain quite soft and in turn, I do see that continuing to push prices downward,” George Ratiu, senior economist and manager of economic research for Realtor.com, told Yahoo Money. “The big question is what needs to happen so we can see lower prices. It’s unsustainable to expect that prices can continue at elevated levels.”

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