According to Freddie Mac, 30-year fixed rate mortgages averaged 5.81% for the week to June 23, up from 5.78% last week.
Last year, the average interest rate this time was 3.02%, and the previous interest rate was so high in the winter of 2008.
"Fixed rates have risen by more than 2 percent for the entire period. From the beginning of this year," he said. Freddie Mac Chief Economist Sam Carter said in a statement. "The combination of rising interest rates and rising home prices is likely to be the driving force behind the recent decline in existing home sales, but in reality, many potential homebuyers are still buying homes. Interested and staying competitive in the market, it has been flat for the past two years. Red activity. ”
Despite the surge, mortgage rates have been flat for the past 40 years. It is well below the record highs recorded in. In particular, the average interest rate in October 1981 was a record high of 18.63%.
Still, Abbey Omodunbi, Assistant Vice President and Senior Economist at PNC Financial Services Group, said the current rise in mortgage rates combined with soaring borrowing costs will ultimately be consumer cautious. He said it would increase.
"I think mortgage rates are likely to rise further for the rest of the year," Omodumbi said in an interview with CNN Business. "The Fed wants to see a softening of housing activity."
The Federal Reserve does not set interest rates for borrowers to pay directly on mortgages, but that behavior affects mortgages. Give. Mortgage rates tend to track 10-year US Treasury bonds. However, interest rates are indirectly affected by the Fed's actions on inflation. When investors see or anticipate rate hikes, they often sell government bonds. It sends higher yields, along with mortgage rates.
Home prices have been affected by record low mortgage rates over the last two years, pandemic migration patterns, the impact of investment firms buying residential real estate, and the impact of FRB mortgage purchases. It has skyrocketed.
Rents and home prices continue to rise at double-digit rates in many regions.
A year ago, buyers who reduced their median $ 390,000 home by 20% and financed the rest with a 30-year fixed-rate mortgage at an average interest rate of 3.02% took out a monthly mortgage. was doing. According to Freddie Mac figures, a payment of $ 1,673.
At today's 5.81% rate, the monthly mortgage payment for the same home will be $ 2,187 and the difference will be $ 514.
Housing seems to have already moved into a "new post-pandemic normal", said George Ratiu, economic research manager at Realtor.com. Rents hit record highs for the 15th straight month, but the pace of growth has slowed, he said, adding that rising house prices are also slowing.
"Market prices will continue to be adjusted to fewer pools and higher funding costs for qualified buyers," he said in a statement. “The transition from an overheated real estate market to a more sustainable market will take time. The good side is ultimately a healthier environment with more choices and better value for more buyers. Should be seen. "
