Home News Mortgage Rates Hit 6.02%, Highest Since the Financial Crisis

Mortgage Rates Hit 6.02%, Highest Since the Financial Crisis

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Mortgage rates soared above 6% this week, shocking homebuyers who paid less than half that amount last year.

The average interest rate on a 30-year fixed mortgage rose to 6.02% this week from 5.89% last week and 2.86% a year ago, according to a survey of lenders released Thursday by mortgage giant Freddie Mac. The last time interest rates were this high was during the 2008 financial crisis. the recession was serious.

Rising mortgage rates is one of the Federal Reserve’s most noticeable effects. A campaign to raise borrowing costs and curb inflation for consumers and businesses. By adding hundreds of dollars or more to your monthly mortgage payments, you’re already making a big difference in the housing market, slowing down what was a frenzy not too long ago. Rising interest rates are forcing some would-be buyers to buy. keep borrowing. other purchasers skimp elsewhere to make their mortgage payments.

The Federal Reserve is doing a delicate dance. Investors hope to be able to cool the economy without sending the US into recession. The Fed, especially in Tuesday’s inflation report, Consumer prices are still rising rapidly.

When Wesley and Kimberly Robinson signed the deal to buy a new home in Rogers, Arkansas last year, the mortgage interest rate was about 3%. By the time their home neared completion this summer, they were well over his 5%.

“When rates started going up, I got a little scared,” Robinson said. Both Robinsons are teachers.

They had paid the builder a non-refundable security deposit, so we went ahead with the purchase. They finalized a mortgage at 5.5% interest in mid-July, and then lowered the rate to 5% when interest rates dipped briefly in the following weeks.

They closed their home this month and moved in with their two daughters, but have yet to sell their old home.

The Robinson family signed a deal last year to purchase a new home in Rogers, Arkansas. Interest rates skyrocketed as the project neared completion.


Photo:

Wesley Robinson

Robinson chose to borrow from an online lender. According to him, a local bank had offered him an interest rate of over 6%.

Mortgage rate volatility is widening the gap between what various lenders offer. Freddie Mac economist Sam Cater suggested earlier this month that borrowers could make big profits by shopping at the lowest interest rates.

Still, rising mortgage costs are one of the biggest obstacles to affordability in the housing market these days. Home prices and rents have risen sharply this year, while mortgage costs have risen, tilting in favor of renting for many Americans.

Potential buyers like Desi Duncker and Victoria Lauture Duncker are waiting for the market to calm down before moving forward. They and their daughter moved from Manhattan to Bloomfield, New Jersey last year, renting a house while introducing his family to the area where he grew up.

Desi Duncker and Victoria Lauture Duncker moved with their daughter to Bloomfield, New Jersey last year. They want to buy homes in the area, but rising interest rates are making them hesitant.


Photo:

victoria lauture dunker

They want to buy, but are being derailed by rising mortgage rates, rising home prices and declining investment values, including bitcoin, Dunker said. Stocks and cryptocurrencies plummet The slowdown this year was partly due to the Fed rate hikes.

“Since January, everything that could have happened against a buyer has happened,” Mr. Dunker said.

He keeps notes about his purchases in Google Docs, and in June he began to realize that mortgage costs were becoming an issue. They may be considering renting an apartment near the station for now. He commutes to New York City for a finance job at a technology company. She runs a podcast on motherhood in her 40+.

Economists have long said that renting and investing in the stock market is a better investment than owning a home, and that could be especially true in 2022. The WSJ’s Dion Rabouin said: is explained.Photo illustration: Elizabeth Smerov

Home prices have continued to rise significantly over the past year, with the median home sale price as of July at Existing Home Still Over $400,000However, second-hand home sales Six consecutive months of declines through Julyand the pace of price increases is slowing.

Signs point to a further slowdown. In the four weeks ending Sept. 4, homes sold on average 0.3% below their final list price, according to real estate broker Redfin. Before that, he spent a year and a half with homes generally selling above list price.

The company also said home touring activity was down 38% year-to-date.

The Fed as the pandemic brought the economy to a halt lowered the base interest rate Nearly to zero, hoping to encourage borrowing and the broader economy. Mortgage rates have fallen to record lows. Buyers rushed to secure low interest rates, fueling a boom in the mortgage industry as homeowners refinanced for lower-rate loans.

Mortgage rates will not automatically change when the Fed raises rates, but they will be greatly affected.

This year’s rapid reversal has brought tough times to the mortgage industry. Originations, which topped $4.4 trillion last year, are expected to drop to just over half that amount by 2022, according to forecasts by the Mortgage Bankers Association, an industry group.

Mortgage refinancing, in particular, has slowed. Rising interest rates hurt the interests of most homeowners. According to MBA, refinancing activity has dropped by more than 80% since he was a year ago.

According to its analysis, just 452,000 homeowners are good candidates for refinancing that lowers interest rates by at least 0.75 percentage points.

Black Knight Ltd,

Mortgage technology and data provider. This is down from his peak of over 19 million in late 2020.

As a result, many lenders are facing challenges, especially non-bank mortgage companies that have built large businesses around refinancing in recent years. Some cut staff, lose money, or close stores.

write destination Ben Eisen [email protected]

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