Mortgage rates in the US jumped to a 22-year high, further squeezing would-be homebuyers already struggling with affordability.
(Bloomberg) — Mortgage rates in the US jumped to a 22-year high, further squeezing would-be homebuyers already struggling with affordability.
The average for a 30-year, fixed loan was 7.23%, the highest since May 2001 and up from 7.09% last week, Freddie Mac said in a statement Thursday.
House hunters are encountering the most-unaffordable market in almost four decades. Borrowing costs that have doubled since early last year are keeping current homeowners from moving and listing their properties for sale. Prices are climbing as buyers determined to seal a deal are left to compete for a supply of choices that Sam Khater, Freddie Mac’s chief economist, called “woefully low.”
The inventory shortage pushed purchases of previously owned homes last month to the slowest pace since the start of 2023, according to the National Association of Realtors. With few listings on the resale market, contracts to buy new homes rose to the highest level in more than a year, government data showed Wednesday. Some of the biggest builders are able to offer better mortgage rates than borrowers otherwise would have access to.
“There are slightly more new homes available, and sales of these new homes continue to rise, helping provide modest relief to the unyielding housing inventory predicament,” Khater said in the statement.
Inflation is cooling, but other recent economic reports have been stronger than expected. That “leaves the door open for a healthy debate about the right move” at the Federal Reserve’s meeting next month, said Danielle Hale, chief economist at Realtor.com.
While policymakers are widely expected to hold interest rates steady this time, “the more open question is whether additional hikes are in store as we near the end of the year,” Hale said.
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