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Mortgage rates climb higher, triggering home price drops

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Mortgage rates continued to rise this week, reaching levels not seen since October 2008, experts said. (iStock)

Interest rates on 30-year mortgages rose again this week, jumping to their highest level since October 2008, experts said.

The average interest rate on a 30-year fixed-rate mortgage rose to 6.29% in the week ending Sept. 22, according to Freddie Mac. Leading Mortgage Market ResearchIt is up from . last week The average is 6.02%, significantly higher than last year’s 2.88%.

Other loan terms were also raised this week. Interest rates on 15-year mortgages rose to 5.44% from 5.21% last week, up from 2.15% last year. 5-year Treasury Indexed Hybrid Variable Rate Home Loans (ARMs) also rose to 4.97%, up from 4.93% last week and up from 2.43% last year.

Freddie Mac chief economist Sam Cater said rising mortgage rates have led to lower home prices, but supply remains a barrier to affordability for homebuyers.

“Home prices are softening and home sales are declining, impacted by rising interest rates,” said Mr Katter. “But despite this drop in sales, the number of homes for sale is well below normal levels.”

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Low housing supply remains an obstacle

Lawrence Yun, chief economist at the National Association of Realtors (NAR), said housing inventories are likely to remain subdued for the rest of the year. said in a statement.

Mr Yun also said the low supply of existing housing has increased the need for new housing construction.

up to date National Association of Home Builders (NAHB)/Wells Fargo Home Market Index (HMI) Builder confidence fell for the ninth straight month, dropping from 49 in August to 46 in September. Anything less than 50 is considered bad.How is self-confidence diminished? rising interest ratesaffordability is being sacrificed by disruptions in building materials supply chains and soaring home prices.

“Builders sentiment is dropping month by month in 2022,” said NAHB chief economist Robert Dietz. The mortgage recession shows no signs of abating, pushing mortgage rates past 6% last week, the highest level since 2008.”

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Home prices soften, but affordability remains an issue

Higher mortgage rates have whetted homebuyers’ appetites, resulting in a seventh consecutive month of declines in existing home sales. Realtor.com. August home sales prices were also down 6% from their June peak.

However, despite the recent softening, house prices are still up 14.1% year-on-year, up 43.8% since August 2019. Jiro.

George Raitu, senior economist at Realtor.com, said:, median buyers of homes now with 30-year fixed-rate mortgages say they’re paying about $900 more each month for their loans than they did a year ago. This increases the homebuyer’s financial burden by more than $10,000.

“Today’s housing market remains very out of reach for buyers who are seeing higher prices reducing their take-home pay and higher interest rates reducing their shopping budgets,” Raitu said. “In many places, price cuts may be the only viable option to restore housing balance and affordability.”

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