Washington >> US average long-term mortgage rates soared ahead of next week’s Federal Reserve meeting. It is expected that there will be an announcement of a further significant increase in major borrowing rates.
Mortgage buyer Freddie Mac today reported that 30-year interest rates jumped from 5.09% last week to 5.23% this week. A year ago, the average rate at this point was 2.96%. Until April, the equal temperament did not exceed 5% in more than 10 years.
Along with the sharp rise in home prices, the sharp rise in interest rates is pushing potential home buyers out of the market.
Mortgage applications have fallen 6.5% from a week ago, the Mortgage Bankers Association reported Wednesday. The Group’s comprehensive index, which measures the number of mortgage applications, is at its lowest level in 22 years. Its refinancing index is 75% lower than it was a year ago.
Last month, the Federal Reserve strengthened its fight against the worst inflation in 40 years by raising benchmark rates by half a percentage point and raising rates even further in the future. The most aggressive FRB move since 2000 means higher costs for personal and corporate mortgages, credit cards, car loans and other borrowings.
Rising borrowing rates appear to be slowing the housing market, which is an important part of the economy. In April, sales of both existing and new homes showed signs of slump due to soaring home prices and a declining supply of available properties.
However, some economists expect that tapering demand may benefit more aspiring home shoppers.
Freddie Mac Chief Economist Sam Carter said, “Price increases have slowed to normal levels, combined with a significant decline in buying activity and an increase in the supply of homes for sale, to buyers interested in buying homes. It will give you some relief. ” ..
Home ownership has become increasingly difficult these days, especially for first-time buyers. In addition to tremendous inflation, rising mortgage rates and rising home prices, the supply of homes for sale continues to be in short supply.
The average interest rate on 15-year fixed rate mortgages, which are popular for refinancing homes, rose from 4.32% last week to 4.38%.
Economists expect the Fed to further halve its major borrowing rates when it meets next week.