Homebuyers and homeowners are facing the highest mortgage rates in three years, a surge that threatens to cool the sizzling real estate market.
According to mortgage company Freddie Mac, the average interest rate on 30-year fixed-rate mortgages rose to 4.42% this week, up more than a quarter percentage point from the previous week and more than a full point year-to-date.
Other companies that track mortgage costs set the average rate even higher.
Borrowing costs have risen across the board as the Federal Reserve raises its short-term interest rate benchmark and plans a handful of more hikes this year. The central bank is trying to slow the pace of inflation, which has been at high levels for several decades.
In the housing market, costs have risen particularly quickly due to a lack of supply and increased demand after the pandemic prompted Americans to move. But higher mortgage rates may put some homebuyers out of the market because they increase the monthly cost of buying a home with a mortgage.
According to Freddie Mac, rising interest rates in recent months have helped increase monthly mortgage payments by more than 10% year over year. This pattern looks similar to what happened in the mid-2000s when the Fed also hiked rates.
Higher interest rates are also causing many homeowners to reconsider refinancing. According to mortgage data company Black Knight, only two million homeowners with strong financial profiles have been able to save money by refinancing inc
That’s an 80% drop year-to-date.
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https://www.wsj.com/articles/mortgage-rates-hit-fresh-three-year-high-11648147243?mod=rss_markets_main Mortgage rates hit new three-year high