Mortgage rates are back up over 7%, after falling last week.
The 30-year fixed-rate mortgage averaged 7.08% in the week ending November 10, from 6.95% the week before, according to Freddie Mac. Last year, the 30-year fixed rate stood at 2.98%.
Mortgage rates rise through most of 2022, spurred by the Federal Reserve’s unprecedented rate hike in order to overcome inflation.
Last week, the It was announced by Fed it will raise interest rates by another 75 basis points, the sixth increase this year and the fourth consecutive increase of this size. While the Ministry of Labor announced that on Thursday consumer prices rose 7.7% in October from last year, less than expected, the Fed is still in its effort to control the price.
“The housing market is the most interest-sensitive part of the economy, and the impact of interest rates on home buyers continues to improve,” said Sam Khater, Freddie Mac’s chief of wealth. “Home sales have fallen sharply and, heading into the end of the year, are not expected to improve.”
Although the Fed does not set the interest rate that borrowers pay directly on mortgages, its actions affect them. Mortgage rates typically track the yield on the 10-year US Treasury bond. As investors see or anticipate rising rates, they make moves to get higher rates and higher mortgage rates.
With mortgage rates up four percent from last year, buyers’ purchasing power has declined. That has pushed many buyers out of the market and those who remain may need to look at a lower price or make adjustments to the location, size, or condition of a home in order to find it. an affordable house.
“The key to making the right decision in this challenging housing market is to focus laser on what you need now and in the years to come, so you can stay in your home. In the long run, buying is a financial decision,” said Danielle Hale, Realtor.com’s chief economist.
Based on home prices in September 2021 and a 30-year fixed mortgage, a typical home buyer with a 20% down payment could be looking at a $1,187 monthly payment last year, according to estimates from Freddie Mac.
This year, due to high rates and mortgage interest hovering at 7%, a typical homebuyer is facing a $2,065 monthly payment. That’s $878 more a month.
Because of this large change in the cost of financing a home, sales are down for eight months running, according to the National Association of Realtors. A survey from Fannie Mae showed that only 16% of people think this is a good time to buy a home, a record low.
But last week mortgage applications rose slightly for the first time in six weeks, according to the Association of Mortgage Brokers, which is indicating that some of them are still buying their houses.
“The demand for home ownership is strong,” said Bob Broeksmit, president and CEO of MBA. “Many buyers are waiting for lower mortgage rates, as well as a clearer picture of the economy.”
The mortgage rate is based on a survey of typical home loan borrowers who put 20% down and have good credit, according to Freddie Mac. But many customers who pay less money up front or less than the full credit will pay more.