October 4, 2022
Mortgage rates drop 5.89% – highest level since 2008 housing crash

US mortgage rates continue to rise, reaching the highest level in nearly 14 years and driving more and more buyers out of the market.

Mortgage Buyer Freddie Mac informed of The 30-year rate rose to 5.89% on Thursday from 5.66% the previous week. This is the highest long-term rate since November of 2008, the collapse of the housing market after the Great Recession began. The rate was 2.88% a year ago.

Pledge rates fell to some of their all-time lows during this period coronavirus pandemicBut they have raised their benchmarks since the Federal Reserve announced in March short term interest rate,

Popular among those looking to refinance their homes, the average rate on a 15-year, fixed-rate mortgage rose to 5.16% from 4.98% last week. The 15-year rate has been above 5% for the first time since 2009, as the real estate market went into a year-long decline. At this time last year, the rate was 2.19%.

A jump in mortgage rates means that typical home buyers will pay up to $600 more per month For the traditional 30-year mortgage, according to Mark Zandi, chief economist at Moody’s Analytics.

Rising interest rates – partly as a result of the Fed’s aggressive push to reduce inflation – Has cooled a housing market that has been hot for years. Many potential home buyers are being pushed out of the market because high rates add hundreds of dollars to monthly mortgage payments.

According to the National Association of Realtors, sales of existing homes in the US have fallen for six months in a row.

“The high cost of home ownership has clearly reduced affordability, as inflation-adjusted monthly mortgage expenses were now at their former peak in 2006,” said Selma Hepp of the real estate research firm CoreLogic. Pledge of all

Home prices continue to climb, and were about 16% higher in July than a year ago, according to corelogic, But prices are now declining, with a 0.3% drop in July from the previous month. The firm expects annual home value gains to slow to 3.8% by July next year.

Mortgage rates don’t necessarily reflect the Fed’s rate hikes, but they tend to track the yield on a 10-year Treasury note. It is influenced by a variety of factors, including investor expectations for future inflation and global demand for US Treasuries.

Recently, sharp inflation and strong US economic growth have sharply raised the 10-year Treasury rate to 3.27%.

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The Fed has raised its benchmark short-term interest rate four times this year, and Chairman Jerome Powell has said the central bank will need to keep interest rates high enough to slow the economy “for some time” Worst case can be controlled. inflation in 40 years

The government reported that the US economy shrank at a 0.6% annual rate from April to June, the second straight quarter of economic contraction, completing an unofficial sign of recession. However, most economists have said they doubt the economy is on the verge of recession or recession, noting that the US job market remains strong.

Applications for unemployment aid fell last week to their lowest level since May, despite moves by the Fed to tame inflation, which usually also cools the job market.

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