Home News Mortgage Rates Hit a Nearly 14-Year High. Here’s The Silver Lining for Homebuyers.

Mortgage Rates Hit a Nearly 14-Year High. Here’s The Silver Lining for Homebuyers.

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Mortgage rate hikes

US mortgage rates this week reached their highest level since 2008, rising almost three-quarters of a percentage point from the beginning of June, according to a Freddie Mac report on Thursday.

Average rate 30-year fixed mortgage It increased from 5.78% last week to 5.81%.Average rate 15 year fixed loan According to Freddie Mac, it rose from 4.81% last week to 4.92%, the highest since 2009.

interest Mortgage rates are skyrocketing Mortgage investors demand higher yields when inflation rises for 40 years, as they fear eating up their returns. According to data from the National Association of Real Estate Agents, high funding has left some buyers out of the market and home sales have fallen monthly since the beginning of the year.

This may open the door to some less competitive buyers as the housing on the market has been scarce for years.

Sam Carter, Freddie Mac’s Chief Economist, said: “But in reality, many potential homebuyers are still interested in buying a home, keeping the market competitive and leveling off the fierce activity of the last two years.”

Soaring house prices

Higher funding will be in addition to the record surge in home prices during the Covid-19 pandemic after the Federal Reserve’s bond purchase program sent borrowing costs to new lows more than 12 times in 2020. .. According to Freddie Mac data dating back 50 years, 30-year fixed mortgages reached a record low of 2.65%.

The Median US Home Prices The NAR said on Tuesday that it rose 15% year-on-year to $ 407,600 in May, surpassing $ 400,000 for the first time. At the same time, existing home sales fell to 5.4 million units at a seasonally adjusted annual pace, the lowest in more than a year, according to NAR data.

Maria Dow, a real estate broker at Coldwell Banker Warburg in New York, said the drop in sales has finally pushed the buyer into the driver’s seat after the seller’s sellers have been around for almost two years. She said there was a “clear slowdown” in the market, which may be due, at least in part, to the end of typical school and the beginning of summer, when many families take vacations.

Now it’s the buyer’s market

“In my sense, I think we’ve been in the buyer’s market for some time,” Daou said. “Buyers are keenly aware of this. Some are waiting because of interest rate and market downturns, others may have more cash on hand, and others are trying to take advantage of the sellers they have. I think. Selling may now take lower offers, not even lower offers in a few months. “

Nadia Evangelou, senior economist at NAR, said rising funding costs combined with record high home prices are hurting affordability, especially for low- and middle-income families.

“Since the beginning of this year, the cost of buying a home has been about $ 800 higher each month,” says Evangelou. “These higher mortgage rates hurt affordability.”

Increased inventory of available homes

The bright spot in the slowing market is the increase in the number of properties available, she said. The Home inventory for sale According to NAR data, it rose to a high of 1.12 million in the seventh month at the end of May.

“We look forward to more homes available on the market, but we need more entry-level homes,” says Evangelou.

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