Mortgages have hit their highest rates in decades, with the 30-year fixed interest mortgage rate surpassing 7% for the first time since 2002, according to the Mortgage News Daily (MND) index.
At 7.08%, the current fixed rate is a far cry from September 2021 rates of 2.86%, and has increased by nearly 2% since the end of August 2022, according to MND. Applications for home refinancing have dipped by 10.9% and new home buyer applications fell by 0.4% in September as interest rates continue to climb, Trading Economics reported. (RELATED: Canada’s Housing Bubble May Have Just Popped)
Mortgage applications in the U.S. also declined, by 3.7%, as of Sept. 23, as many new buyers are waiting for the market to improve, Trading Economics reported.
“After a brief pause in July, mortgage rates have increased more than a percentage point over the past six weeks. Ongoing uncertainty about the impact of the Fed’s reduction of its MBS and Treasury holdings is adding to the volatility in mortgage rates,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
The recent spikes in federal interest rates have had a ripple effect on mortgage rates. Home payments on a $400,000 home are now in the ballpark of $1,000 per month, and many lenders have begun quoting 30-year fixed rate loans over 7.08%, according to MND.
Jaw-dropping. Average rate on a 30 year fixed-rate mortgage pierced 7 today, per Mortgage News Daily, reaching 7.08%. A 20-year high.https://t.co/ogmE4QK5F0 pic.twitter.com/qhasC44GIr
— Neil Irwin (@Neil_Irwin) September 27, 2022
As interest rates continue to rise, home buyers and sellers are leaving the market. Hazel Shakur, a Redfin real estate agent, reported that the end of summer is normally associated with an uptick in consultation requests from prospective sellers; however, recent market trends have left sellers “reluctant” to list their homes, Barron’s reported.
“I polled other listing agents in my area, and sure enough, we went into this weekend with no appointments. A lot of sellers are very reluctant about selling their house,” Shakur said.
“No one wants to be the person who buys the house for too much,” Shakur added.
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