The common long-term US mortgage rate rose this week after falling for six straight weeks, adding to the challenges potential homebuyers face amid higher home prices and a limited supply of accessible houses.
Mortgage buyer Freddie Mac reported Thursday that the common on the benchmark 30-year rate increased to six.42% from 6.27% last week. That’s greater than double the year-ago average rate of three.11%.
The long-term rate reached 7.08% in late October and again in early November because the Federal Reserve has continued to crank up its key lending rate this yr in an effort to chill the economy and tame inflation.
The large increase in mortgage rates has torpedoed the housing market, with sales of existing homes falling for 10 straight months to the bottom level in greater than a decade.
While home prices are actually dropping as demand has declined, they’re still nearly 11% higher than a yr ago. Higher prices and a doubling of mortgage rates have made homebuying much less reasonably priced and a rather more daunting prospect for many individuals.
George Ratiu, senior economist at realtor.com, calculates that the monthly payment for a median-priced house is now about $2,100, before taxes and insurance, up greater than 60% from a yr ago. The median is halfway between the best and lowest figures.
Sales of latest homes are also falling. Ratiu expects mortgage rates will remain above 6% next yr and sales to remain low.
“All of those data are indicative of a market going through a significant reset, which is the Fed’s goal,” he said.
The Fed has hiked its benchmark rate of interest seven times this yr to a variety of 4.25% to 4.5%, the best in about 15 years. It has signaled it could raise them one other three-quarters of some extent next yr.
