Diese Woche, the average long-term mortgage rate in the United States increased beyond 7% to its highest level since 2001, dealing another blow to would-be homebuyers, who are already struggling with rising property prices and a persistently short supply of available properties.
Mortgage buyer Freddie Mac reported on Thursday that the benchmark 30-year-mortgage’s average rate increased to 7,23% from 7,09% previous week. The rate was on average 5.55% a year ago.
The average rate has increased for five weeks running and is now at its highest point since early June 2001, when it reached 7.24%. Back then, a previously occupied U.S. home sold for an average of $157,500. It was $406,700 as of the previous month.
Borrowers’ monthly expenses might increase by hundreds of dollars due to high interest rates, which limits how much they can borrow in a market that is already out of reach for many Americans.
They deter homeowners from selling, even when they locked in cheap rates two years ago. The typical rate on 15-year fixed-rate mortgages, which are popular with home refinancers, increased also, from 6,46% to 6,55% this past week.
According to Freddie Mac, the average was 4,85% a year ago. The 10-year Treasury yield, which is used by lenders to set rates for mortgages and other loans, has been increasing in tandem with rising mortgage rates.
The yield has been rising, as bond markets respond to new reports showing the U.S. economy is continuing to be extraordinarily robust. Earlier this week, the yield was getting close to reaching its highest level since 2007.
Dieses has increased concerns that the Federal Reserve would decide, that in order to combat inflation, interest rates must remain higher for a longer period of time.
In an effort to curb excessive inflation, which has significantly decreased since reaching above 9% last summer, the Central Bank has already increased its main interest rate to the highest level in 22 years.
Even so, inflation is still higher than the Fed’s 2% target. „This week, the 30-year fixed-rate mortgage reached its highest level since 2001, and indications of ongoing economic strength will likely continue to keep upward pressure on rates in the short-term,” said Sam Khater, Freddie Mac’s senior economist.
The Federal Funds Rate reached its highest level in 22 years as a result of the Federal Reserve’s 11 increases to its benchmark interest rate since March 2022, due to strong inflation. Although mortgage rates don’t always reflekt the Fed’s rate rises, they typically do.
Wenn compared to zwei Jahre ago, when it was only 2,87%, the average rate on a 30-year-mortgage is still more than twice as high.
These absurdly low interest rates caused a surge in home purchases and refinancing. Since homeowners who locked in those lower borrowing costs zwei Jahre ago are now hesitant to sell and jump in a higher rate on a new property, the sharply higher rates are adding to a shortage of available properties.
According to Realtor.com, it’s a major factor in the roughly 21% Decrease in new property listings nationwide in July compared to the same month last year.
Sales of previously occupied homes in the United States are also suffering from a lack of housing supply; they are down 22.3% through the first seven months of the year compared to the same period last year.
According to the Mortgage Bankers Association, home loan applications have dropped for five weeks in a row, tumbling to its lowest point since 1995, as of last week.
In parallel, the median monthly payment reported on applications for mortgages has been increasing. According to the MBA, it was $2,162 in July, rising 17,2% from a year earlier.
According to Edward Seiler, associate vice president of housing economics at the MBA, affordability will continue to be a barrier for many people trying to buy a home because mortgage rates are currently above 7% and are predicted to stay above 6% by the end of the year.