The world of mortgages is feeling the heat. The Federal Reserve’s rigorous rate-increasing approach has pushed home affordability to a low not seen in years. How does this affect prospective buyers? With the added financial burden when financing mortgages, houses come with a higher price tag. Coupled with homeowners clinging to their low rates and not wanting to sell, potential homebuyers are caught in a tough spot. Result? A 20% dip in home sales compared to last year.
This week’s 30-year fixed mortgage rate: 7.09% (Last week: 6.96%)
Last year’s 30-year fixed mortgage rate: 5.13%
Last time rates exceeded 7%: November last year at 7.08%
Historical comparison: April 2002’s rate was 7.13%
Freddie Mac’s top economist, Sam Khater, provides some insights:
“The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb. Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales.”
The stats provided by Freddie Mac aren’t just random numbers. They’re calculated from thousands of mortgage applications from lenders nationwide, focusing solely on applicants with stellar credit and a 20% down payment.