June 29, 2022

Herald of Fashion

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Mortgage rates are at their highest level in more than a decade

Mortgage rates are at their highest level in more than a decade

The 30-year fixed-rate mortgage averaged 5.11% in the week ending April 21, up from 5% the week before, according to Freddie Mac. It’s the seventh consecutive week of increases and is well above the 2.97% average this time last year.

The last time rates reached that level was in April 2010 when it was 5.21%, according to Freddie Mac.

“While spring is usually the busiest home buying season, the uptick in prices has caused some volatility in demand,” said Sam Khater, chief economist at Freddy Mac. “This is still a seller’s market, but buyers who are still interested in buying a home may find that competition has eased.”

Buyers were scrambling to get a home before prices went too high. Those who couldn’t achieve a lower rate find themselves unable to afford much higher payments on today’s homes, said George Ratio, director of economic research at Realtor.com. This is starting to show in sales figures, with existing home sales for the month of March decreased 2.7% From February – even as prices reach a level All-time record.

It is also difficult to find affordable, entry-level homes because there are so few on the market. The mix of tight inventory and high rates are affecting sales in the middle of the market, he said.

“With the cost of financing a home about 40% higher than last year, demand for homes is clearly cooling, with many first-time buyers finding themselves unable to qualify for a mortgage on a home that meets their needs,” Ratio said.

George Ratio, director of economic research at Realtor.com, said this week’s rate hike comes on the heels of a steady rise in 10-year Treasuries, which crossed the 2.8% mark for the first time since December 2018.

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The Federal Reserve does not set mortgage rates, but its actions affect them indirectly. US Treasuries – particularly 10-year Treasuries – are the vanguard of fixed-rate mortgages. When 10-year Treasury yields rise, mortgage rates tend to rise as well.

Ratio said mortgage rates are expected to continue to rise. The Federal Reserve is expected to act more aggressively to rein in high inflation in the coming months and the central bank is widely expected to raise interest rates by 50 basis points at its next meeting in May.

“The Fed’s intent to cool demand appears to be working, driving housing markets toward a much-needed equilibrium,” Ratio said.