Mortgage Rates on the 30-year Fixed Loan Reach a 23-Year High at 7.92% According to Mortgage News Daily
Rates on the 30-year fixed mortgage have hit a new high, reaching 7.92% on Tuesday, as reported by Mortgage News Daily’s Rate Index. This marks the highest level for the most popular US home loan in 23 years.
The increase in rates has resulted in average monthly payments of approximately $1,820 per month, following a recent 12 basis-point climb. This is the highest mark in 23 years, and homeowners are now facing higher monthly financial obligations.
The rise in mortgage rates plays a crucial role in determining housing affordability. Coupled with high home prices and low inventory, many potential buyers have been deterred from entering the market in recent years.
The Federal Reserve’s ongoing campaign of raising interest rates has contributed to the surge in borrowing costs across the economy. This has led to a “lock-in” effect, as current homeowners are reluctant to move homes due to previously securing a lower mortgage rate. As a result, both sellers and buyers have been discouraged from engaging in real estate transactions.
In fact, Redfin reported a decline in its Homebuyer Demand Index, which dropped to its lowest level in nearly a year. Mortgage-purchase applications have also fallen to their lowest point in three decades, indicating a decreased interest in buying homes.
Furthermore, the median asking price for homes rose by 5.2% year-over-year, reaching $388,223 in the four weeks leading up to October 8, according to Redfin.
Inventory shortages have further contributed to the tightness of the housing market. Compared to the same period last year, the total number of homes available for sale decreased by 14% in the four weeks leading up to October 8.
The combination of rising mortgage rates, increasing home prices, and limited inventory continues to impact the US housing market, creating challenges for prospective buyers and sellers alike.
Image Source: Mortgage News Daily
Caption: Rates on the 30-year fixed mortgage reached 7.92% on October 17.
Source: Mortgage News Daily
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