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Mortgage rates jump as home affordability drops

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Mortgage rates in the United States have risen again after falling for the second straight week, as the cost of owning a home continues to price potential buyers from the home market.

As a result, some potential buyers are canceling transactions, reducing competition and increasing the number of homes available for sale.

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According to Freddie Mac’s latest primary mortgage market survey released Thursday, the average interest rate on 30-year fixed rate mortgages is currently 5.51%. Up from 5.3% last week.. At this point last year, the percentage of the most popular mortgage products in the United States averaged 2.88%.

A new home for sale in Madison, Georgia. ((AP Photo / John Buzzmore, File) / AP Newsroom)

The average 15-year fixed rate bond has also risen, rising from 4.45% a week ago to 4.67%. The 15-year rate for the same week in 2021 was 2.22%.

“Finddie Mac’s chief economist, Sam Carter, said,” mortgage rates fluctuate as fiscal and financial drag slows economic growth. ” “Affordability is a major obstacle to home ownership for many Americans, as interest rates, soaring levels of home prices, and inflation continue to affect consumers in more than a decade. . “

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According to data from the Mortgage Banking Association, the average purchase loan size has fallen from a record high of $ 460,000 in March to $ 415,000 in the week leading up to July 8.

A sign for sale next to the house

Home for sale on Oak Street in Patchogue, NY (Steve Pfost / Newsday RM via Getty Images / Getty Images)

Meanwhile, demand for mortgage applications has declined for the second straight week.This is the latest sign that the housing market is chilling as Americans work on it. 40 years-high inflation Squeezing their budgets and raising interest rates will increase the cost of paying monthly mortgages.

More and more potential buyers are also becoming confused and canceling transactions.

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Last month, home sales cancellations reached the highest rate since the pandemic began, with approximately 60,000 home purchase contracts signed. Analysis by Redfin..

“We saw many buyers cancel their deals when mortgage rates rose to nearly 6% in June,” said Lindsay Garcia, Miami’s Redfin real estate agent. “Some people had to resign because of soaring interest rates that made them unable to get loans. The economic uncertainty has made buyers more mean than usual,” he said.

House

A man passing by an open house sign in front of an apartment for sale in Santa Monica, California (Reuters / Lucini Corson / Reuters photo)

Redfin Chief Economist Darryl Fairweather said in a statement Thursday that the drop in demand is already here, with a new report by a real estate agent showing that the number of homes nationwide has increased for the first time in three years last month. It pointed out.

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“The country’s economic predicament has already cooled the housing market, and they are likely to continue to curb demand,” Fairweather said. “The Fed has suggested that interest rates could be raised further to combat stubborn high inflation that could undermine consumer confidence, and lower stock prices are future housing that can afford a down payment. It means fewer buyers. “

She told the seller, “If you decide to sell, do it immediately before the demand drops further. And price carefully. This is not the time to test the body of water. Price cuts or homes. To remove it from the market. “

Lucas Manfredi of FOX Business contributed to this report.

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