Average long-term mortgage rates rose more than a quarter of a percentage point this week to their highest level since 2007 as the Federal Reserve stepped up its efforts to cut. decades of high inflation and cool the economy.
Mortgage buyer Freddie Mac reported Thursday that the 30-year rate rose to 6.29% from last week’s 6.02%. This is his highest since August 2007, a year ago when the housing market crash triggered the Great Recession.
After more than doubling in 2022, rapidly rising mortgage rates threaten to put even more homebuyers on the sidelines. Last year, prospective homebuyers saw interest rates well below 3%.
On Wednesday, the Fed lowered its benchmark borrowing rate to 3/4 more points This is the fifth time the index has risen this year, and the third straight year it has risen by 0.75 points.
Perhaps nowhere is the impact of the Fed’s actions more evident than in the housing sector.existing home sales Decreased for 7 consecutive months As the cost of borrowing money rises put homes out of reach for more people.
The National Association of Realtors said Wednesday that existing home sales fell 0.4% from July last month to a seasonally adjusted annual rate of 4.8 million.
Sales fell 19.9% from last August, the slowest pace for the year since May 2020, early in the pandemic.
Nationwide median home prices rose 7.7% year-over-year in August to $389,500. As the housing market cools, home prices are rising at a moderate pace after rising about 20% annually earlier this year. Before the pandemic, median home prices were up about 5% a year.
In the four weeks to September 11, home listings fell 19% year-on-year, the biggest drop since May 2020, according to real estate broker Redfin.
Many potential homebuyers are opting out of the market as higher interest rates add hundreds of dollars to their monthly mortgage payments. are also likely to be pegged at much lower interest rates, making them reluctant to sell.
A move by the Federal Reserve on Wednesday raised the benchmark short-term interest rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level since early 2008.
By raising borrowing rates, the Fed will do just that How much does it cost to get a home loan and a car or business loanConsumers and businesses will likely borrow and spend less, cooling the economy and slowing inflation.
Mortgage rates don’t necessarily reflect Fed rate hikes, but they do tend to track 10-year Treasury yields. This is influenced by a variety of factors, including investor expectations of future inflation and global demand for U.S. Treasuries.
The average interest rate for 15-year fixed-rate mortgages, popular with those looking to refinance their mortgage, jumped to 5.44% last week from 5.21%. This is his highest since 2008. At this time last year, his 15-year mortgage interest rate was 2.15% for him.