Mortgage rates top 7% their highest since 2001
The average interest rate on a 30-year mortgage jumped to above 7% this week, the highest level since 2001.
Mortgage rates rose from 6.94% last week to 7.16% this week, the Mortgage Bankers Association said Wednesday.
“As the ability to afford a new mortgage diminishes, buyers are forced to step back, and potential sellers are faced with the trade-off of letting go of their affordable monthly payments and low rates becoming less favorable, meaning overall inventory and sales will suffer,” Zillow Senior Economist Nicole Bachaud said in a statement Wednesday.
Mortgage rates have more than doubled since year start, and economists predict rates may still go higher.
Mortgage rates could reach 8.5% “which would be another big shock to the housing market,” National Association of Realtors Chief Economist Lawrence Yun told a group of real estate investors last week.
MoneyWatch: U.S. home prices could fall by as much as 20% in 2023
The average interest rate on a 30-year mortgage jumped to above 7% this week, the highest level since 2001.
Mortgage rates rose from 6.94% last week to 7.16% this week, the Mortgage Bankers Association said Wednesday . The average rate on a 15-year fixed-rate mortgage grew to 6.39% from 6.09% last week , the MBA reported.The rapid rise in mortgage rates is cooling the housing market by spooking buyers with higher borrowing costs and prompting new home builders to scale back their plans, economists said. And some homeowners are holding off on listing their properties because they don’t want to give up mortgages they financed when rates were much lower.”As the ability to afford a new mortgage diminishes, buyers are forced to step back, and potential sellers are faced with the trade-off of letting go of their affordable monthly payments and low rates becoming less favorable, meaning overall inventory and sales will suffer,” Zillow Senior Economist Nicole Bachaud said in a statement Wednesday .
• None Mortgage rates have more than doubled over the last year — and could keep climbing
• None Home values plunge in some U.S. cities as mortgage rates riseThe higher rates translate into very real costs for homebuyers. For a median-priced home of $384,800 purchased with a 20% down payment, a 7.16% interest rate adds an extra $750 or so per month to a mortgage — up from 3.2%, which was the rate at the beginning of 2022.As a result, the 7.2% rate has led to fewer Americans applying for mortgages and refinancing, MBA’s Deputy Chief Economist Joel Kan said in a statement. Sales of previously occupied U.S. homes fell in September for the eighth month in a row, matching the pre-pandemic sales pace from a decade ago. Mortgage rates have more than doubled since year start, and economists predict rates may still go higher. That’s because the Federal Reserve is expected to continue boosting its federal benchmark rate in an ongoing battle against inflation. Despite the Fed’s swift and heavy rate increases, inflation has hardly budged from 40-year highs and the labor market remains tight.Technically, the Fed doesn’t set mortgage rates , but so far this year, mortgage rates have inched up almost in lockstep with the central bank’s hikes. Wall Street analysts expect the Fed to raise its rate by another 1.5% before the end of 2022. Mortgage rates could reach 8.5% “which would be another big shock to the housing market,” National Association of Realtors Chief Economist Lawrence Yun told a group of real estate investors last week . Other analysts predict mortgage rates could hit double digits.No matter the exact percentage, a higher mortgage rate means a pricier monthly payment for homebuyers. A percentage point increase can add hundreds of dollars to a property’s monthly payments, depending on the size of the loan.
