Home News Mortgage rates dip again, but it’s still tough to afford a home

Mortgage rates dip again, but it’s still tough to afford a home

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The average 30-year fixed rate mortgage for the week to June 2 was 5.09%. According to Freddie Mac, it was down from 5.10% last week. It’s still well above the average of 2.99% since this time last year.

“Mortgage rates have continued to fall this week, but they are still significantly higher than last year, impacting affordability and purchase demand,” said Sam Carter, chief economist at Freddie Mac. “Towards the summer, the potential homebuyers pool is shrinking, supply is rising and the housing market is normalizing. This is welcome news following the unprecedented market tightness of the last few years. . “

Price increase It was already driving many prospects to the bystander. However, as prices continued to rise this year, more home shoppers put the search on hold.
“Continuous rises in house prices and recent rises in interest rates have slowed buyer activity in April, as evidenced by month-on-month declines. Existing home sales, New home salesHome sales are pending as some buyers have completely opted out of the market. “ Hannah Jones, an economic data analyst at Realtor.com, said. “Still, homebuyers continued to fight record high home prices in May.”

At the end of May 2021, buyer Freddie Mac, who reduced $ 375,500 homes (slightly below the median price of existing homes) by 20% and financed the rest with an average 30-year fixed-rate mortgage, 2.99. At a% interest rate, the monthly mortgage payment for principal and interest was $ 1,265.

Today, homeowners who buy a home of the same price for an average of 5.09% will pay $ 1,629 a month for principal and interest. According to Freddie Mac figures, this is $ 364 more per month, and cumulative interest payments during the loan period are $ 131,147 more.

But Jones said there may be good news as more homes hit the market.

“Inventory is still low by historical standards, but it’s starting to lean towards being more buyer-friendly,” she said. “This could lead to a slowdown in price increases in the not too distant future, as sellers compete for buyers and ultimately create a more balanced market.”

Will mortgage rates continue to rise?

Still, many buyers have very high mortgage rates and can’t afford to buy a home that suits their needs.

“Currently homeshoppers will tell you we’re not there yet, as high interest rates and home prices are still creating challenges in finding their ideal home.” Jones said.

Mortgage rates tend to track 10-year US Treasury bonds. However, interest rates last week were almost flat despite rising 10-year Treasury yields.

However, interest rates are also indirectly affected by the actions of the Federal Reserve.

For the past two months, the Fed has sought to curb inflation by raising interest rates. And the central bank has suggested that further rate hikes will be made in the future.

Earlier this week, President Joe Biden met with Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen to support the Federal Reserve’s actions to curb inflation. He promised to refrain from influencing interest rate decisions.

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