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Mortgage rates continue to climb

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According to Freddie Mac, 30-year fixed-rate mortgages averaged 5.30% for the week to May 12, up from 5.27% last week. This is the highest since 2009, well above the average of 2.94% since this time last year.

Some buyers are expected to drop out of the market as mortgage rates rise and the cost of buying a home rises. As a result, competition may decrease in some markets and the pace of increase in home prices may slow down.

However, according to the Mortgage Banking Association, the rise in mortgage applications last week shows that buyers are worried despite rising mortgage rates.

Freddie Mac Chief Economist Sam Carter said, “Even though rising mortgage rates have increased monthly payments by about one-third compared to a year ago, homebuyers continue to be. It shows resilience. ”


He said several factors contributed to this continued demand, including a rogue wave of first-time homebuyers considering buying. In addition, spring is usually the peak season for purchases.

“We expect monetary policy and inflation to discourage many consumers, weaken buying demand and slow the rise in home prices in the coming months,” Carter said.

Last week, the Federal Reserve Bank said it Raise the federal funds rate 0.5 percentage points, the biggest jump since 2000 to curb inflation. Mortgage rates tend to track 10-year US Treasury bonds. However, interest rates are also indirectly affected by the Fed’s actions on inflation.

“Yields on 10-year Treasuries have been stable at around 2.9% in recent weeks, but mortgage rates have risen following the FRB’s target interest rate hike,” said Joel Berner, senior economic research analyst at Realtor.com. Continued to rise. ”

The Fed’s governor and the Biden administration are looking to curb inflation, Berner said. but, Consumer price index -Major inflation indicators-Stay high and major stock market indices continue 1 week slide“The dirty words of American economists and financiers”recession. ‘“”
As long as regulators focus on controlling inflation, mortgage rates are not expected to fall significantly.For homebuyers, it’s a listing price Record high And the number of homes for sale is floating near historic lows.

“Rising living costs and lower investment values ​​make it harder to save down payments, and higher mortgage rates make housing borrowing more expensive,” says Berner.

Some buyers have been fully priced from the market prior to the busy summer season, he said, removing some pressure from listing prices.

According to Berner, there are some early signs of a slowdown in prices. In each of the last two months, the percentage of listings that have lowered their listing prices has increased compared to a year ago.

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