Home News Mortgage rates reach 20-year high, close in on 7%

Mortgage rates reach 20-year high, close in on 7%

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Mortgage rates hit a 20-year high this week, approaching just 7%, further crushing many homebuyers’ dreams.

Average 30-year fixed mortgage rates jumped to 6.92% from last week’s 6.66%, according to Freddie Mac. Interest rates are up more than a percentage point since his start of September, more than double what he was at the beginning of the year.

Rising home prices and tight inventories, combined with rapidly rising interest rates, are pushing budget buyers to postpone their purchase plans. market.

“Interest rates resumed their record rise this week, with 30-year fixed-rate mortgages hitting their highest level since April 2002,” Sam Cater, chief economist at Freddie Mac, said in a news statement. . “We continue to see a dual economic narrative in the data. It is pushing housing demand down sharply, and the next few months will undoubtedly be crucial for the economy and the housing market.”

pushed home buyers

Interest rates are 3.7 percentage points higher than at the beginning of the year, and trouble continues in the housing market.

Homebuyer demand remains at its lowest level in 22 years. Mortgage Bankers Association Surveys found for the week ending Oct. 7. Mortgage applications were down 2% from the previous week and down 39% from a year ago.

at the same time, pending home sale August, a measure of home health, also fell 2%, marking the third straight month of decline. Contract signings decreased by 24.2% year-on-year.

“Homebuyers are well aware that interest rates have gone up,” Adriana Perestica, president of Via Real Estate in Washington, told Yahoo Money. “The first question they ask is what the monthly payment will be.”

Real estate agent Steve Bremis (left) talks with house hunters Makayla Gavitt (middle) and David Harris at a condominium open house in Somerville, Massachusetts. (Credit: Brian Snyder, Reuters)

With a median mortgage of $427,000 and a 20% down payment at current interest rates, your monthly mortgage payment is $2,254. Realtor.comThat’s a 75% increase over the same week last year and adds about $11,600 to the annual burden of financing homes.

And now, potential buyers could struggle to qualify for a mortgage.

Mortgage credit availability was down 5.4%, with the September index reading at 102.5. MBAs data This is the lowest level since March 2013. A decline in the index suggests that lending standards are tightening.

Lenders have tightened requirements for government-backed loans, often favored by first-time home buyers, down 5.7% in September. This is his seventh drop in the last eight months.

“There were a lot of people who were happy with their homes. When they decided to move, they realized what the reality was,” said Jason Sharon, owner and broker of a mortgage company. “First-time buyers got sidetracked, but now it’s starting to happen to a second group of buyers as well.”

Scott Thiel, a high school history teacher, carries

Scott Thiel, a high school history teacher, puts up a “for sale” sign in Moore, Oklahoma, as part of his second job as a real estate agent. (Credit: J Pat Carter/AFP via Getty Images)

Home sellers lose optimism

At the same time, home sellers are becoming less and less confident about their prospects.

Housing sentiment reached its lowest level since 2011 in September, according to a survey. fannie mae Investigation, . The share of respondents who said it was a good selling opportunity was 59%, down from 74% of him a year ago. Only 19% of respondents say it’s a good time to buy, and 75% say it’s a bad time to buy.

As the pool of first-time buyers has dwindled in recent months, some buyers still in the market are taking advantage of weakening demand to make deals with sellers.

According to Realtor.com, the percentage of homes with price cuts jumped to 19.5% in September from 11% last year. This is typical of him since 2017, although he has risen from his 2019 level, but is below the rate of markdowns he reached in September 2018, which reached 21.2%.

Potential buyers Laura (L) and Nick Partee at an open house in Alexandria, Virginia. Realtors 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)

Potential buyers Laura (L) and Nick Partee at an open house in Alexandria, Virginia. Realtors 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)

“Last month, I actually saw a surge in first-time homebuyers who were unable to buy an entry-level home in the last three to five years because they didn’t have the option to purchase an entry-level home. It’s a bidding war,” said Perestika.

As we move into the colder months, buyers house prices fall As the competition subsides. Price cuts are likely to continue to widen as mortgage rates continue to rise and homebuyer demand slows due to high borrowing costs.

“There is still demand for homes. But when it comes to pricing homes, sellers have to be more reasonable about their expectations.

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

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