Home News While rising mortgage rates have some homebuyers giving up, others think they’ve found a workaround

While rising mortgage rates have some homebuyers giving up, others think they’ve found a workaround

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‘Numbers just don’t cut it’: Rising mortgage rates have forced some to give up on buying a home, while others think they’ve found a workaround

America’s most popular mortgage loan surged again this week, dealing another blow to emaciated home shoppers staring at their highest borrowing costs in two decades.

average 30 year fixed mortgage rate — now at the 7% mark — more than double what it was at the beginning of the year.

Even as the surge in home prices continues to slow, the cost of financing has skyrocketed dramatically, leaving buyers on the sidelines or out of the market altogether.

“Numbers don’t work for them anymore” To tell Lisa Sturtevant, Bright MLS Economist for the Mid-Atlantic Region, said:

“The 7% line is also kind of a mental hurdle for buyers, even those who are still qualified,” she says. “Maybe they are waiting to see if interest rates go down.”

still many Purchaser Some have stopped watching, others have found workarounds to higher rates.

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30 year fixed rate mortgage

Average 30-year mortgage rates jumped to 6.92% this week, up from 6.66% last week, says mortgage giant Freddie Mac reported on thursdayAt this time last year, the rate averaged 3.05%.

The 30-year rate hasn’t been this high since April 2002.

Freddie Mac’s Sam Cater said: chief economist.

“The next few months will definitely be crucial for the economy and the housing market.”

15 year fixed rate mortgage

Freddie Mac said the typical interest rate for a 15-year mortgage was 6.09% this week, up from 5.90% last week.

At this point a year ago, the 15-year rate averaged 2.30%.

Buyers today face a different reality than they did just a few months ago. At the time, many were forced to offer far above the asking price, forcing them to forego any contingencies to acquire a home.

for the price of building a house affordable, sales plummeted. The latest data from the National Association of Realtors showed sales in August fell for the seventh month in a row, and he fell 20% year-over-year.

5 year variable rate mortgage

Five-year adjustable rate mortgage (ARM) rates rose to 5.81% this week from 5.36% last week.

At this point last year, the five-year ARM averaged 2.55%.

ARMs start with a fixed rate term (usually 3 to 10 years). Interest rates are usually lower than fixed-rate loans like the more popular 30-year mortgage.

But after the first period, the ARM rate will be adjusted up or down based on benchmarks such as: prime rate.

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The Case for Even Higher Mortgage Rates

The Federal Reserve has raised trend-setting interest rates five times this year. slow down the economybut the uncomfortably rapid rise in consumer prices has not abated.

This means further rate hikes are on the horizon. Mortgage rates do not directly correspond to changes in his Fed’s rates, but they are affected.

Officials at the Fed’s last meeting said the only way to combat inflation was to continue aggressive monetary policy tightening.

“Many participants stressed that the costs of doing too little to lower inflation are likely to outweigh the costs of doing too much,” according to the newly released report. minutes from a meeting.

Low cost alternative

Some buyers try to avoid today’s high borrowing costs by fixing interest rates on their mortgages for short periods of time.

“The popularity of variable-rate mortgages is growing very quickly because many borrowers see an opportunity to refinance to fixed-rate mortgages at some point before the ARM adjusts,” said Washington. says Corey Burr, a real estate agent at DC area.

He said borrowers considering this route should consider variable-rate loans with an initial term of seven or ten years.

“That way, you’re more likely to create refinancing opportunities,” Barr says.

Mortgage application of the week

Mortgage activity has fallen again amid rising interest rates, according to a weekly survey of financial institutions. Mortgage Bankers Association.

Refinancing and purchase applications were down 2% compared to the previous week.

Refis are down 86% from last year and purchase loan applications are down 39%.

The MBA’s chief economist, Mike Fratantoni, said the share of ARM applications also remained “very high” at 11.7%.

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This article is for information only and should not be construed as advice. It is provided without warranty of any kind.

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