Typical mortgage payment has soared $337 in just six weeks as interest rates almost hit 7%
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The average American homeowner saw their monthly mortgage payment rise 15 percent, or $337, according to a shocking new report from redfin.
The report goes on to say that rising mortgage rates at about seven percent are the highest since July 2007, shortly before the crash that triggered the Great Recession.
This causes potential home buyers to get cold feet and decide not to buy in the current market.
In addition, homes remain on the market longer, causing owners to lower prices to the highest level since 2015.
Since January, pending sales have not been at their current low level, while the number of homes selling for below market rates is at its highest level since 2020. While the number of new homes is down 14 percent from the same time in 2021.
Jason Aleem of Redfin is quoted in the report as saying, “It is imperative that home sellers respond quickly and aggressively as the market changes.”
He continues: ‘This means that you need to adjust your prices immediately if you want to be competitive and attract offers from a smaller group of qualified home buyers. If your house isn’t the ‘nicest’ in your area, you have to lower the price to sell it.”
According to the Redfin report, rising mortgage rates of about seven percent are the highest since July 2007, shortly before the crash that triggered the Great Recession
One of Redfin’s key indicators of downturn in potential buyers is the fact that “homes for sale” as a search term on Google fell 33 percent in September compared to the same time last year.
New home listings are 14 percent lower than a year ago
One of Redfin’s key indicators of the downturn in potential buyers is the fact that “homes for sale” as a search term on Google fell 33 percent in September compared to the same time last year.
Other factors, such as home visit requests, have declined, in addition to mortgage purchase requests.
At the time of writing, the median home price in the United States is $369,250, up seven percent year on year.
Retail prices in crime-ridden San Francisco are down four percent, while in New Orleans they are down 11 percent.
Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year yield rose from 6.29 percent last week to 6.70 percent. In contrast, the percentage stood at 3.01 percent a year ago.
The average rate on 15-year fixed-rate mortgages, popular with people looking to refinance their homes, rose from 5.44 percent last week to 5.96 percent.
Rapidly rising mortgage rates threaten to sideline even more home buyers after more than doubling in 2022. Last year, potential home buyers looked at rates well below 3 percent.
Freddie Mac noted that for a typical mortgage amount, a borrower tied to the higher end of the weekly rate range over the past year would pay several hundred dollars more than a borrower tied to the lower end of the range.
Seattle’s housing market is slowing faster than any other in the country, a new study has revealed — as purse-strapped buyers increasingly shy away from home purchases
Last week, the Federal Reserve raised its benchmark lending rate by another three-quarters of a point in a bid to curb the economy, its fifth rise this year and its third consecutive 0.75 percentage point rise.
Perhaps nowhere else is the effect of the Fed’s action more apparent than in the housing sector. Existing home sales have been falling for seven straight months as rising borrowing costs make homes out of reach for more people.
The government reported Thursday that the US economy, battered by rising consumer prices and rising interest rates, shrank 0.6% year-on-year from April to June. That was unchanged from the previous estimate for the second quarter.
Fed officials predict they will raise their benchmark rates further to around 4.4% by the end of the year, a full point higher than they had envisioned in June. And they expect to raise the rate again to about 4.6% next year. That would be the highest level since 2007.
By raising borrowing rates, the Fed is making it more expensive to take out a mortgage and a car or business loan. Consumers and businesses will then probably borrow and spend less, causing the economy to cool down and slow down inflation.
Mortgage rates don’t necessarily reflect the Fed’s rate hikes, but tend to track 10-year Treasury yields. That’s influenced by several factors, including investor expectations for future inflation and global demand for US Treasuries.