The percentage of mortgages has fallen for the second straight week, the largest decline since December 2008.
According to Freddie Mac, the average fixed interest rate mortgage for 30 years, 5.30% in the week up to July 7 was down from 5.70% in the previous week. This was significantly higher than last year's 2.90%
period, rising sharply at the beginning of the year and hitting a 5.81% high in mid-June. But since then, financial concerns have pushed them down. The drop of 40 basis points offset some of the significant rate hikes in May and June.
"In the last two weeks, concerns about a potential recession have continued to grow, and 30-year fixed-rate mortgages have fallen by 0.5%," said Sam Carter, chief economist at Freddie Mac. Says.
But the room to buy a house is still a challenge. Joel Berner, Senior Economic Research Analyst at Realtor.com, said mortgage rates have been at their highest levels since the late 2000s, with listing prices rising more than 8.5% year-on-year for the 24th straight month.
If there is a silver lining for homebuyers, it means more homes are on the market, he said. In June, the active list grew with the highest annual growth rate in Realtor.com's data history.
"As more homes are on the market, sellers are forced to compete for price," he said. “The cost of financing a home remains high compared to recent years, but as the overheated housing market begins to cool, buyers will have more opportunities to find a home in their price range.”
Higher rates also curb future buyer demand. According to the Association of Housing Loan Banks, mortgage applications fell 5.4% from the previous week in the week leading up to July 1.
"Prices are significantly higher than they were a year ago, so home purchase and refinancing applications remain sluggish," said MBA's Vice President of Economics and Industry Forecasting. Joel Kan said. “Purchasing activity is hampered by ongoing affordable challenges and low inventory, and homeowners are still reducing their incentives to apply for refinancing.”
Inflation is the source of income. It is difficult for buyers to buy a home because, for the most part, the cost of borrowing reduces their ability to buy.
A year ago, buyers who reduced their average $ 390,000 home by 20% and covered the rest with a 30-year fixed-rate mortgage with an average of 2.90% paid their monthly mortgage Freddie. According to Mac calculations, it's $ 1,299.
Today, homeowners who buy a house of the same price at an average of 5.30% will pay $ 1,733 per month for principal and interest. That's $ 434 more every month.
This week's decline in mortgage rates fell below 2.8% in the first week of July after spending most of June over 3%, a recent 10-year Treasury yield. It follows the fluctuation.
The Federal Reserve does not set interest rates for borrowers to pay directly to mortgages, but their actions affect them. Mortgage rates tend to track 10-year US Treasury bonds. When investors see or anticipate rate hikes, they often sell government bonds.
In addition, continued concerns about our heading into a bear market have pushed investors to safer, longer-term bonds, Berner said.
"This reversal may sound ominous, especially in the midst of sustained inflation agreed upon by both the market and the federal government, with more federal rate hikes to tame. It may be necessary, but it is not yet known if these market conditions will lead to higher unemployment rates and lower production, which are characteristic of the recession. "
