Mortgage Rates Hit 7.45%, Highest in Three Years, Threatening Home Improvement Stocks

Yahoo Finance··US·Read original
3▲0 ▼3Impact / 5
Summary · why it matters

The average interest rate on a 30-year mortgage has climbed to 7.45%, its highest level in three years, a surge driven by higher 10-year Treasury yields that could soon weigh on home improvement stocks. The rate pushes the monthly payment on a $500,000 mortgage to $3,479, compared with $2,995 just seven months ago, an additional $5,813 a year in mortgage interest expense for home buyers. Yahoo Finance Executive Editor Brian Sozzi flagged the move, citing BlackRock's Rick Rieder, who described the US housing market as frozen. Sozzi said the pressure has implications not only for home builder stocks such as Toll Brothers but also for companies like Home Depot and Lowe's, since buyers facing sharply higher mortgage payments will have less money for kitchen remodels or outdoor living spaces. He called the trend a major economic problem that is not getting enough attention and said it is serving as a real drag on the US economy.

Impact on assets 7

Consumer Discretionary▼ · 3 stocks
The Home Depot Inc
HD
▼ NegativeDemandrelevance

Higher mortgage payments leave buyers with less money for kitchen remodels and outdoor living, weighing on Home Depot's end-customer demand.

Lowe's Companies Inc
LOW
▼ NegativeDemandrelevance

Sharply higher mortgage costs reduce discretionary spending on remodels, dragging on Lowe's product demand.

Toll Brothers Inc
TOL
▼ NegativeDemandrelevance

Mortgage rate at a three-year high of 7.45% and a frozen housing market pressure Toll Brothers' home sales.

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