Mortgage rates continued to climb this week, adding further pressure to the cooling housing market as more Americans are priced out of buying homes.
Freddie Mac reported Thursday that the average rate for the benchmark 30-year fixed mortgage jumped to 7.63%, up from 7.57% last week and from 6.94% a year ago.
The rate for a 15-year mortgage also climbed, averaging 6.92% after coming in last week at 6.89%. One year ago, the rate on a 15-year fixed note averaged 6.23%.
Freddie Mac’s chief economist, Sam Khater, recommends borrowers look into their options with multiple lenders before committing to loan terms as mortgage rates are expected to march even higher.
MORTGAGE DEMAND PLUMMETS TO NEW THREE-DECADE LOW AS RATES RACE TOWARD 8%
“Mortgage rates continued to approach eight percent this week, further impacting affordability,” Khater said in a statement. “In this environment, it’s important that borrowers shop around with multiple lenders for the best mortgage rate. With research showing down payment is the single largest barrier to first-time homebuyers attaining homeownership, borrowers should also ask their lender about down payment assistance.”
Home affordability in the U.S. continues to decline as home prices remain elevated due to a lack of supply while rising mortgage rates are driving payments up further.
HOME FORECLOSURES ARE ON THE UPSWING NATIONWIDE
Typically, in a market where interest rates rise as fast as they have under the Federal Reserve’s aggressive rate-hike campaign, home prices would be expected to pull back. But prices remain high due to a lack of homes for sale as more homeowners who are locked in at lower interest rates stay put rather than sell.
The National Association of Realtors (NAR) reported Thursday that home prices rose for the third consecutive month in September while existing home sales fell for the sixth straight month.
“Given low supply and rising mortgage rates, it’s no surprise sales fell yet again,” said Robert Frick, corporate economist with Navy Federal Credit Union. “But that they hit a low not seen since 2010, in the aftermath of the burst housing bubble, underscores the housing crisis is worsening.”
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