Mortgage rates surged above 5% after briefly and barely below that level last week.
Interest rates on 30-year fixed mortgages rose to 5.22% from 4.99% the week before, according to the Reuters. freddie macWhile still lower than the 5.81% registered in June, it is two percentage points higher than at the beginning of the year.
The surge in rates is disheartening news for price-shocked buyers on the sidelines battling tough affordability conditions. Meanwhile, a cooling market has forced homeowners to cut their asking prices. So I am very cautious about selling.
“The 30-year fixed rate rose well over 5% this week, a reminder that recent volatility has persisted,” Freddie Mac chief economist Sam Cater said in a statement. Supply has been fairly tight in the U.S., while the decline in purchase demand continues to decline.As a result, house prices are likely to continue to rise, but at a slower pace over the summer.”
Homebuyers hesitate amid higher interest rates
Mortgage rates fell below 5% last week for the first time since April, but the short grace period did little to entice potential buyers.
housing mindset Lowest score in the last 10 years In July, according to a Fannie Mae survey. Only 17% of respondents say it’s a good time to buy a home, down from 20% the previous month.
A survey conducted over the weekend by the Mortgage Bankers Association also showed a 1% drop in the number of purchase offers from a week ago. August 5th, down 19% from the same week a year ago. Activity has declined in five of the past six weeks as affordability pressures worry buyers.
WSFS Mortgage President Jeffrey Reuben told Yahoo Money, “Rising interest rates are impacting home affordability and are a major drag on first-time homebuyers.” They haven’t stifled men yet, until we don’t see any of them, which means being a little more careful and measuring what you can afford and what you can afford. increase.”
Potential buyers may struggle to qualify for a mortgage. Mortgage availability fell to its lowest level since May 2013 last month. He’s down 9% from the previous month, his MBA reports. This indicates that lending standards are tightening.
“Lenders have responded to the reduced demand for refinancing and purchase loans by reducing their loan offerings, such as ARMs, cash-out refinancings and investment properties,” said MBA’s vice president of economic and industry forecasts. ‘s Joel Kan said in the news. release.
Home sellers are cutting property prices
More home sellers are lowering listing prices to attract buyers.
The share of homes with price cuts increased from 14.9% in June to 19.1% in July, approaching levels typical of 2017-2019. Realtor.comThe median home price for active listings is $449,000 From a high of $450,000 in June, it fell in July.
For sellers, this translates into dollars lost at closing.The average purchase price of a financed home is Another $10,000 According to Black Knight, July is down (-2.2%) and over $31,000 (-6.6%) since March.
The percentage of homeowners who believe now is a good time to sell continues to decline, dropping from 76% in May to 67% in July, according to Fannie Mae’s Confidence Index.
Redfin chief economist Daryl Fairweather told Yahoo Money: “Often, buyers can’t keep up with such sums and eventually either exit the housing market or become more thrifty. That means sellers have to meet where buyers are. That’s it.”
Gabriella is a Personal Finance Reporter at Yahoo Money. follow her on her twitter @__Gabriela Cruz.