Home News Mortgage rates jump by nearly a half point

Mortgage rates jump by nearly a half point

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Mortgage rates rose nearly half a percentage point this week, reversing last week’s brief drop.

Interest rates on 30-year fixed mortgages rose to 5.55% from 5.13% the week before, according to the Reuters. freddie macWhile still lower than the 5.81% registered in June, it is more than two percentage points higher than at the beginning of the year.

Interest rates continue to sideline price-sensitive homebuyers as record home prices and affordability weigh on demand. Companies still looking to buy take advantage of the lack of competition to negotiate a lucrative deal when the deal closes.

“Rising mortgage rates combined with slowing economic growth are weighing on the housing market,” said Sam Cater, chief economist at Freddie Mac. But with demand waning, potential homebuyers are still on the sidelines, waiting to re-enter the market.”

First-time buyers show signs of coming back

Demand for mortgages hit its lowest point since 2002 this month. Mortgage Bankers Association The survey for the week ending Aug. 19 is due to lower buying and refinancing activity. Purchasing activity was down 2% compared to the previous week and 21% lower than the same week last year.

But there are potential signs that some first-time homebuyers are back on the market.

Government mortgage applications from the Federal Housing Administration, the Department of Veterans Affairs and the Department of Agriculture, among others, were all popular with first-time buyers, up 4%, according to the MBA. Just as buying activity at the high end of the market began to wane, so did demand for loans at the low end of the market, he reports, MBA.

According to Vice President Keith Gumbinger, HSH.comsome buyers in today’s market do not consider interest rates as the most important factor when purchasing.

“If you can afford to pay a high interest rate on a house you love, you will want to buy a house you love,” Gambinger told Yahoo Money. “Another way to think about it is that when people use credit cards, they don’t necessarily spend a lot of time thinking about what they’re spending on interest. They pursue what they want.” And the cost of financing is like collateral damage.”

A prospective buyer at an open house in Alexandria, Virginia. Real estate agents in several parts of the United States are starting to see signs of activity among people looking for a home to buy. (Credit: Jonathan Ernst, Reuters)

Still, most prospective buyers in today’s market are more conservative before rushing to make a home offer.

Falling affordability is still a problem for many. Buying a home at the current median home price would cost him $2,050 a month, up 61% from a year ago, according to Realtor.com data.

“Those prices are exorbitant for most borrowers, but keep in mind there may be low-cost opportunities offshore,” Gunbinger said. Whether the cost opportunity is where you want to live or where you want to move — that’s another discussion.

Realtor Steve Bremis speaks on the phone at a condominium open house in Somerville, Massachusetts.  (Credit: Brian Snyder, Reuters)

Realtor Steve Bremis speaks on the phone at a condominium open house in Somerville, Massachusetts. (Credit: Brian Snyder, Reuters)

Home sellers become cautious as buyer competition weakens

Home sellers are beginning to realize that they are losing a bit of their edge as buyers are no longer rushing to close deals.

Existing home sales fell for the sixth month in a row in July, according to the . National Real Estate Association, the seasonally adjusted rate is 4.81 million. Sales he fell 5.9% from June, down 20.2% from the previous year.

As of the end of July, there were 1.31 million unsold existing homes, equivalent to 3.3 months of supply at the current sales pace. A balanced market requires at least six months.

Some sellers withdraw their listings from the market, while others are more down-to-earth and meet buyers halfway.

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A ‘for sale by owner’ sign is posted in front of a property in Monterey Park, Calif. (Credit: Frederic J. Brown, Getty Images)

According to Realtor.com, the number of sellers who have lowered their property prices has dropped from 9.4% in July last year. 19.1% This year is close to typical 2017 and 2019 levels.

“Sellers were very optimistic a few months ago, but this summer confirmed reality. Via real estate group In Washington, he told Yahoo Money. “Think of it this way. They’re not lowering their prices, they’re adjusting them to what’s in the market right now. A few months ago they were setting prices in advance, now It’s reversed.”

Gabriella is a Personal Finance Reporter at Yahoo Money. follow her on her twitter @__gabriellacruz.

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