Mortgage rates are rising again, approaching 7%. CNN business

Mortgage rates rose again this week, stopping just below the 7% mark.

According to Freddie Mac, the average rate on 30-year fixed-rate mortgages was 6.94% for the week ending October 20, up from 6.92% the week before. A year ago, the 30-year fixed rate was 3.09%.

Mortgage rates have more than doubled since the beginning of the year as the US Federal Reserve (Fed) launched an unprecedented campaign to raise interest rates to curb skyrocketing inflation. A combination of central bank rate hikes, investor fears of a recession and mixed economic news have made mortgage rates increasingly volatile over the past few months.

“30-year fixed-rate mortgages continue to hover at 7%, hurting the housing market in the form of lower demand,” said Sam Cater, chief economist at Freddie Mac.

Home sales have been declining month by month since February and are now Longest home sales slump Since the October 2007 subprime mortgage collapse.

The Fed’s aggressive interest rate hikes are hurting the housing market.

The Federal Reserve does not directly set the rate borrowers pay on mortgages, but its actions affect them. is in When investors see or anticipate rate hikes, yields move higher and mortgage rates move higher.

This week, 10-year US Treasury bonds hit their highest level since 2008. This indicates that mortgage rates could rise further.

Rising interest rates are scaring many home buyers. Mortgage applications are now down for the fourth month and to their lowest level in 25 years, according to Joel Kann, vice president and deputy chief economist at the Mortgage Bankers Association.

“The rate and level of interest rate increases this year have significantly reduced refinancing activity, exacerbating existing affordability challenges in the purchase market,” he said. “Housing activity, from new home starts to home sales, has been trending downward in line with rising interest rates.”

According to the MBA, home purchase applications are down 38% year-over-year and refinancing is falling off the cliff at 86% year-over-year.

However, inflation remains high and interest rates could rise further.

Hannah Jones, Economic Data Analyst at Realtor.com said:

Rising mortgage rates are making it even harder for prospective buyers to afford a home.

“Buyers, builders and sellers alike have taken a step back to consider the best course of action given rising mortgage rates and sustained inflation,” Jones said.

Homebuyer sentiment hit its lowest level since 2011, according to Fannie Mae, while homebuilder sentiment fell for the 10th straight month this month. Report from the National Association of Home BuildersNew listings have decreased compared to last year as sellers have responded to market changes and refrained from listing activities.

A year ago, Freddie calculated, a buyer who paid a 20% down payment on a $390,000 home and financed the rest with a 30-year fixed-rate mortgage with an average interest rate of 3.09% would have a monthly mortgage payment of It was $1,331. Mac.

Today, if a homeowner bought a similarly priced home at an average interest rate of 6.94%, they would be paying $2,063 a month in principal and interest. $732 more each month.

According to Freddie Mac, the average mortgage interest rate is based on a survey of traditional homebuying loans to high-credit borrowers with a 20% down payment. However, many buyers with lower upfront payments or less than perfect credit will pay more.

“Price growth has slowed and prices have started to fall, but the fact that mortgage rates are high and continue to rise means that many of today’s buyers will not be able to afford it when home prices peak. It means we’re facing higher housing payments than ever before,” Jones said. “Flexible buyers will find deals this fall by focusing on affordable areas, taking advantage of market conditions, and leveraging their bargaining power as homes stay in the market longer. maybe we can.”

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