News

Mortgage Rates Approach 7% Amidst Rising Prices

2 Mins read

Mortgage rates have recently reached close to 7%, posing a challenge for home buyers dealing with both higher rates and stronger prices.

According to Freddie Mac’s weekly report, the average 30-year fixed-rate mortgage stands at 6.9% this week, representing a 0.09 percentage point increase from the previous week. This marks the highest rate since mid-July and the first time rates surpassed 7% since November 2022.

Comparatively, buyers of a $400,000 home would now owe nearly $400 more per month at the current rate than they would have in the same week of 2022 when the average 30-year fixed rate was 4.99%.

Freddie Mac Chief Economist Sam Khater attributes this rise in rates to a combination of positive economic data and the U.S. government credit rating downgrade. Despite the increase in rates and a decrease in purchase demand, home prices continue to rise due to limited unsold inventory.

While other measures have surpassed 7% this year, Freddie Mac’s survey, being a government-sponsored enterprise that monitors mortgage rates, is often cited in analyses and forecasts. Mortgage News Daily reports that daily rates have remained above 7% since last Thursday, and the Mortgage Bankers Association’s gauge briefly exceeded 7% at the beginning of July.

However, data released in July offers a more positive outlook on housing demand. Although existing-home sales declined in June, contract signings saw a slight increase. Additionally, new home sales data for June reveals that buyers still in the market have turned to home builders who can provide a greater selection and more flexibility in pricing compared to individual sellers.

Housing Market Faces Challenges as Mortgage Rates Rise

The housing market, which experienced a recession last summer due to rising interest rates, had shown signs of recovery in recent months. Analysts from Morgan Stanley were optimistic, claiming that the housing headwinds were reaching a global peak. Similarly, the chief economist of the National Association of Realtors declared that the housing recession had come to an end.

However, the recent increase in mortgage rates has deterred potential homebuyers. With home prices on the rise and limited inventory available, buyers are feeling the strain. According to Redfin data, the median home sale price has finally surpassed last year’s levels after falling short in the first half of this year.

This shift in the market is reflected in the Mortgage Bankers Association’s index, which measures purchase loan application volume. Demand for home purchase loans has decreased for three consecutive weeks, with the index reaching a level just 6% higher than its lowest recorded point.

Joel Kan, the deputy chief economist of the trade group, expressed concern over limited housing inventory and high interest rates that make affordability a challenge for many potential buyers.

Unfortunately, there doesn’t seem to be much relief on the horizon. The 10-year Treasury yield, which often influences mortgage rates, reached its highest point since November 7, 2022. As a result, mortgage rates are expected to continue rising.

Related posts
News

U.S. Stock Futures Rise as Inflation Gauge May Fall Below 4%

1 Mins read
U.S. stock futures are on the rise today in anticipation of new data that may reveal a decrease in an inflation gauge…
News

Kanabo Group Reports Narrowed Pretax Loss for First Half-Year

1 Mins read
Kanabo Group, a leading medical-cannabis company, has announced a substantial reduction in its pretax loss for the first half of the year….
News

Trump's Chances of Winning the 2024 Presidential Election on the Rise

1 Mins read
According to betting markets tracked by RealClearPolitics, Donald Trump’s chances of winning the 2024 presidential election have seen an improvement this week….

Leave a Reply

Your email address will not be published. Required fields are marked *

− 5 = 4