Ryan Ratliff, center, real estate sales associate with Re/Max Advance Realty, shows Ryan Paredes, left, and Ariadna Paredes a home for sale in Cutler Bay, Florida, on April 20, 2023.
Joe Raedle | fake images
The average rate on the popular 30-year fixed mortgage rose to 7.72% on Tuesday, according to Mortgage News Daily.
Mortgage rates loosely track mortgage yields 10-year Treasury, which has been rising this week after solid economic data. Rates haven’t been this high since the late 2000s.
Earlier this year, the 30-year fixed rate fell to around 6%, causing a brief burst of activity in the spring housing market. But throughout the summer it rose steadily again, leading to a drop in sales, despite strong demand. The current trend appears to be even higher, with the possibility of rates exceeding 8%.
The Federal Reserve did not raise interest rates two weeks ago, but signaled the possibility of another hike this year and fewer cuts than expected next year. Investors were waiting to see the results of economic data for the first week of October.
“We’re in the first week of October and the data has been stronger,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “This morning’s JOLTS (Job Openings and Labor Turnover Survey) is the biggest and worst confirmation so far this week, and it’s driving yields to new long-term highs. It’s actually pretty simple, though unpleasant and unfortunate for fans of low guys. “.
Higher rates have crushed affordability, affecting both new and existing home sales markets. While builders had been benefiting from the tight supply of existing homes for sale, higher mortgage rates are a major concern now. Builder confidence fell into negative territory in September for the first time in five months.
To put rates in perspective, for a borrower purchasing a $400,000 home with a 20% down payment on a 30-year fixed loan, the monthly payment today is about $930 more than when rates were at 3% during the heyday. of the pandemic. -19 pandemic.