NAR Lawrence Yun

Mortgage rates may head toward 8.5% if they break through the 7% threshold they’re on the verge of now, according to the chief economist of the National Association of Realtors.

That possibility is based on a technical analysis of mortgage rates from NAR’s Lawrence Yun, who studied key levels of resistance that borrowing costs will face after Thursday’s news that a closely watched measure of inflation hit a 40-year high.

This year’s rise in borrowing costs, which have surged to the highest since 2002, has hammered housing affordability, slowed sales and spurred price declines.

“Today’s inflation rate report is going to test that 7% level,” Yun said during a presentation at the National Association of Real Estate Investors in Atlanta. “Once it’s broken, the next level of resistance is 8.5%, which would be another big shock to the housing market.”

Resistance refers to levels on a chart that analysts believe may cause the increase of an index, asset price or interest rate to stall or reverse. Yun compared it to a battlefront between two armies.

“Once one army makes a breakthrough, there’s a huge advance,” he said.