According to Freddie Mac, the average rate for 30-year fixed-rate mortgages was 5.89% in the week ending Sept. 8, up from 5.66% the week before. This is significantly higher than last year’s 2.88%.
After starting the year at 3.22%, mortgage rates surged in the first half of the year, reaching 5.81% in mid-June. But since then, concerns about the economy and the Federal Reserve’s anti-inflation mandate have made them more volatile.
“Mortgage rates have risen again as the market continues to manage the outlook for more aggressive monetary policy to counter rising inflation,” said Sam Cater, chief economist at Freddie Mac. .
Interest rates fell in July and early August as recession fears took hold. But Fed Chairman Jerome Powell’s remarks at the Fed’s annual meeting in Jackson Hole in August refocused investor attention on the Fed’s fight against inflation, pushing interest rates higher. Did.
This week, investors eagerly awaited the release of the Federal Reserve’s Beige Book. This book provides regional trends in the US economy and an indication of what will happen to interest rates at the Federal Reserve Board meeting at the end of September. All 12 of his Fed’s 12 districts saw sustained price gains in Wednesday’s announcement, Jones said, though nine of them saw moderate gains.
Hannah Jones, economic data analyst at Realtor.com, said: “This is an early sign of an eventual easing in inflation and could precede a slowdown in rate hikes.
The Federal Reserve does not directly set the interest rates borrowers pay on mortgages, but its actions affect them. When investors see or anticipate a rate hike, they often sell government bonds, which drives up yields and increases mortgage rates.
Market slows amid affordability issues
With mortgage rates rising and home prices remaining near record highs, many homebuyers are putting their home search on hold.
A year ago, a buyer who paid a 20% down payment on a home with an average price of $390,000 and paid the rest with a 30-year fixed-rate mortgage with an average interest rate of 2.88% calculated that the monthly mortgage payment would be The amount was $1,295. From Freddie Mac.
A homeowner buying the same priced home today at an average interest rate of 5.89% would pay $1,849 a month in principal plus interest. An additional $554 each month.
Mortgage applications fell last week as 30-year fixed rates returned to June highs, said Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association.
Fratantoni said interest rates were unlikely to drop again anytime soon, but a strong job market would still make people want to buy homes.
“While there are still no signs of a recovery in purchase offers, a strong job market and rising housing inventory should eventually lead to increased purchase activity.”
While mortgage rates are rising, so is the range of interest rates offered, according to Freddie Mac. That means borrowers can benefit from shopping for better interest rates.
Freddie Mac research shows that borrowers can save an average of $1,500 over the life of a loan by obtaining one additional interest rate quote, and an average of approximately $3,000 if five quotes are obtained. I can do it.
Source: www.cnn.com
