News US Economy News Mortgage Rates This High Have Sunk Home Prices in the Past Off the Charts: The Visual Says It All By Diccon Hyatt Diccon Hyatt Diccon Hyatt has written hundreds of articles about how public policy and the economy intersect with personal finance, tracking all the latest dynamics affecting your money. Before joining The Balance, he covered business and community news for 17 years, including Princeton, New Jersey's high-tech Route 1 Corridor. learn about our editorial policies Published on October 12, 2022 Fact checked by Mrinalini Krishna Fact checked by Mrinalini Krishna Twitter Mrinalini is the senior investing editor at The Balance and is an expert in investing, financial journalism, digital media, and more. She's been a journalist for more than 10 years at organizations such as the Financial Times and Investopedia, and she has a master's in business and economic reporting from New York University. learn about our editorial policies Photo: John M Lund Photography Inc / Getty Images The last time mortgage rates got as high as they are now, home prices fell off a cliff. Will it happen again? The average rate for a 30-year fixed mortgage rose to 6.81% last week, a level not seen since July 2006, the Mortgage Bankers Association said Wednesday. That was an ominous date in the housing market since it was shortly before prices began a years-long slide, ultimately losing more than a quarter of their value before beginning to recover according to the S&P CoreLogic Case-Shiller House Price Index, as the chart below shows. Those high mortgage rates are making monthly payments balloon, keeping many buyers out of the market, and have put downward pressure on prices. While the situation is very different in many ways from what came right before the Great Recession, experts still predict a drop in prices, albeit not quite as severe as what happened in the early 2000s. Have a question, comment, or story to share? You can reach Diccon at firstname.lastname@example.org. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Mortgage Bankers Association. "Mortgage Applications Decrease in Latest MBA Weekly Survey."