The numbers: Mortgage rates in the US continue to rise, driving potential homeowners hundreds of dollars in costs.
The rise in mortgage rates followed the Federal Reserve walking interest rates again to tackle the worst inflation the economy has faced in 40 years.
The 30-year fixed-rate mortgage averaged 6.29% on September 15 data released by Freddie Mac on Thursday.
That’s 27 basis points more than the previous week – one basis point is equal to one-hundredth of a percentage point.
The rise in rates is bad news for potential buyers, as it could potentially add hundreds of dollars to their mortgage payments.
Mortgage rates are now at their highest level since 2008, Bob Broeksmit, president and CEO of the Association of Mortgage Banks, said in a statement.
The typical mortgage applicant’s monthly payment is $456 more than it was in January, he added.
Given the rise in rates and the withdrawal of buyers, the median price of an existing home in the US fell to $389,500 in August, from $403,800 in the previous month. National Association of Realtors said:.
A year ago, the 30-year mortgage interest rate stood at 2.88%.
The average interest rate on the 15-year mortgage also rose to 5.44% last week.
The adjustable-rate mortgage averaged 4.97%, up from the previous week.
“The housing market continues to face headwinds as mortgage rates rise again this week, after 10-year yields jump to their highest levels since 2011,” Sam Khater, chief economist at Freddie Mac, said in a statement.
“Affected by higher rates, house prices are falling and home sales have fallen,” he added.
The country is still struggling with a shortage of houses for sale. And “many homeowners simply choose not to sell at all because they don’t want to face the tough housing market,” Daryl Fairweather, chief economist at Redfin, told MarketWatch.
“And that means that fewer homes are coming onto the market. So while buyers are pulling out, sellers are also pulling out,” she added.
Meanwhile, mortgage applications rose in anticipation of further rate hikes last week. Buyers are eager to enter the market before mortgage rates get even higher.
Ultimately, home prices fall as a result of higher rates, and sellers respond to lower demand with a “good thingFederal Reserve Chairman Jerome Powell said. during a press conference on Wednesday when they announced the rate hikes.
“House prices rose at an unsustainably rapid level,” Powell said.
“Longer term, we need supply and demand to better match each other so that house prices rise to a reasonable level… and people can afford a house again,” he added. “The housing market may have to go through a correction to get back to that place.”
The 10-year Treasury yield rose
above 3.6% in Thursday morning trading.
Do you have ideas about the housing market? Write to MarketWatch reporter Aarthi Swaminathan at [email protected]