Highest Hike In Mortgage Rates Since 2002

Mortgage Rates
Mortgage Rates

For over two decades, mortgage rates have increased sharply, making homeownership even less feasible for many prospective purchasers. The fixed-rate 30-year mortgage’s average interest rate increased this week to 7.08%, as per mortgage juggernaut Freddie Mac. This comes after the Federal Reserve aggressively increased interest rates in an effort to combat inflation, making it the highest it has been since April 2002.

The cost of a typical house loan has increased significantly over the past two years due to the more than doubling of mortgage rates. With a 20% down payment, the payment every month on a $350K home will now be $1,870 as opposed to 2021’s $1,169, when rates of interest were around 3%.

Some Recent Updates On The Mortgage Rates

According to Robert Dietz, the NAHB’s senior economist, several buyers had been priced out. It’s really difficult to acquire that down payment if one doesn’t have an avenue to their parents’ bank. The process of becoming a homeowner is made more difficult by rising rates interest. Additionally, they deter homeowners from upgrading their homes. If you own a property and have a 2%-3% in the mortgage, Dietz said, you’re probably not in a rush to sell it since doing so would result in a higher rate of mortgage. Therefore, the amount of used inventory is nearly half of what was needed.

Chief Economist L. Yun of the NAR agreed. In a declaration, Yun attributed the slow pace in the case of selling homes in June to “simply not enough homes for sale.” Despite the general life-changing situations, fewer Americans were moving.

Existing-home sales in June decreased 19.9% from the same month last year. Mortgage rates are closely correlated with 10-year yields of the Treasury, which have also been rising recently on speculation that the government may need to maintain higher interest rates for longer to control inflation.