Mortgage interest rates are rising and no one is spared.
The average interest rate on a 30-year fixed-rate mortgage was 5% as of the week ending April 14, an increase of 28 basis points from the previous week, Freddie Mac FMCC said, + 0.31% on Thursday. One basis point is equal to one hundredth of a percentage point or 1% of 1%.
This is the first time since February 2011 that the reference mortgage product has reached the 5% threshold. Mortgage interest rates are now nearly 2 percentage points higher than during the popular spring season for buying homes in 2021. At that time last year, the average interest rate on a 30-year fixed-rate mortgage was 3.04% .
The 15-year fixed rate mortgage rose above the 4% threshold for the first time since 2018, averaging 4.17%. The 5-year hybrid mortgage with adjustable interest rate, indexed to the state budget, averaged 3.69%, up 13 basis points from the previous week.
“As Americans grapple with historically high inflation, the combination of rising mortgage rates, rising house prices and limited stocks make the pursuit of home ownership the most costly for a generation,” said Sam Hatter, chief economist at Freddie Mac. .
Earlier this week, the 10-year treasure approached 2.8%, but then fell. Mortgage interest rates roughly follow the direction of the yield on long-term bonds, including the yield on the 10-year treasury TMUBMUSD10Y, 2.829%.
Bond investors look closely at inflation indicators and the Federal Reserve’s position. Some analysts see the latest consumer and producer price indices as a signal of a peak in inflation, but others say it may be premature to declare a peak.
Meanwhile, interest rates on mortgages are rising – and this is putting significant pressure on buyers.
“While this may still be a loophole, it increasingly appears that the combination of significantly higher mortgage rates and sharp increases in house prices has a cooling effect on demand,” said Joshua Shapiro, chief US economist at MFR Inc. ., says a research note, citing data on applying for a mortgage.
In fact, data from the Mortgage Bankers Association in recent weeks has shown a decline in mortgage applications backed by the Federal Housing Administration, which economists see as an indication that home buyers are being pushed out of the market for the first time. FHA loans are more popular with first-time buyers because they have less onerous eligibility requirements in terms of down payments and credit ratings than loans supported by Fannie Mae FNMA, + 2.18% and Freddie Mac, although they usually come with higher mortgage rates.
But there is evidence that even the richest homebuyers are also experiencing the pain of higher prices and rising prices. A recent report from real estate brokerage company Redfin RDFN, -4.21%, found that mortgage locks for loans used to buy second homes have fallen to their lowest level since May 2020.
While demand for these holiday properties was still 13% above pre-pandemic levels, Redfin researchers said that the historically rapid rise in mortgage interest rates has made even the most free buyers more expensive.
“The pandemic jump in holiday home sales is coming to an end, as mortgage rates are rising at the fastest pace in history, leading some second-home buyers to withdraw,” the report said. Redfin Deputy Chief Economist Taylor Marr.
Marr added that the new lending fees, which affect secondary housing mortgages, may also have affected buyers ‘demand, while stock market volatility may have weakened with some of these buyers’ down payments. However, this is a worrying sign for the wider housing market.
“When tariffs and prices go up so much that a holiday home starts to look like a burden rather than a good investment and a fun place to bring your family on the weekends, many prospective buyers are thinking,” Mar said.
Add Comment