Wednesday, July 6, 2022

Lockdown: US mortgage rate rises to 5.3%, highest since 2009

US mortgage rates rose again this week, discouraging some homebuyers.

Freddie Mack said in a statement on Thursday that the average rate on 30-year loans was 5.3%, up from 5.27% last week and the highest since July 2009.

Rates keep track of yields on the 10-year US Treasury note, which touched 3% last week for the first time since 2018. US consumer prices rose more than expected in April, signaling the need for the Federal Reserve to act aggressively to curb inflation. Mortgage costs will follow as the Federal Reserve raises its benchmark interest rate.

Mortgage rates have risen sharply this year

Traditionally during the busiest and most competitive seasons in the housing market, high interest rates put more pressure on buyers to close deals before loans become more expensive. Others stop searching the home after calculating they can not afford large mortgage bills.

At the current 30-year average, a borrower with a $ 300,000 mortgage would have to pay $ 1,666 a month, $ 384 more than at the end of the previous year.

Greg McBride, chief financial analyst at, says many cash buyers in the market, including homebuyers and real estate investors, are not sensitive to interest rates, so they can buy even if first-time buyers withdraw. Will continue to do so

“The increase in mortgage rates since the beginning of the year has had the same effect on affordability as house prices have risen by more than 20 per cent,” McBride said. “This will definitely reduce demand as many potential home buyers will pay the price. But as long as inventory is low, rising interest rates will not become a buyer’s market. “

Adjustable-rate mortgages are gaining popularity as an affordable option. Last week, Mortgage Bankers’ Association data showed that ARMs, which reset variable rates at predetermined times based on the market, had the largest share of home loan applications since 2008.

Freddie Mack said the current five-year ARM average averaged 3.96% last week to 3.98%.

(Updated with analyst comments from paragraph six.)

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