You won’t believe it, but mortgage rates have shot up to levels we haven’t seen since 2002! Yep, those numbers are soaring, and it’s making the dream of owning a home feel a bit out of reach for many hopeful buyers out there.
Hang on tight, because the average interest rate on a 30-year fixed-rate mortgage has skyrocketed to a whopping 7.09%. Freddie Mac, the big player in the mortgage world, spilled the beans on this one. Why the sudden leap? Well, the Federal Reserve has been on a mission, raising interest rates like there’s no tomorrow, all to wrestle down that pesky inflation.
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In just two short years, mortgage rates have done a double take, more than doubling in fact! That cozy home loan you were thinking of? Yeah, that’s going to cost you quite a bit more now. Let’s break it down: if you’re eyeing a $350,000 home and can put down 20%, you’re looking at a monthly payment of $1,880. But rewind to 2021 when rates were chilling below 3%, and that payment was a smooth $1,159. Ouch!
Guess what? Buyers are feeling the pinch big time. Robert Dietz, the big brain economist at the National Association of Home Builders, puts it like this: “A lot of buyers have been priced out.” If you don’t have the luxury of a parental piggy bank for that down payment, you’re in for a real challenge.
Hold the phone – rising interest rates aren’t just messing with first-timers. Folks who already have a home are thinking twice about making a move. Who’d want to give up a mortgage at 2% or 3%? Not many. So, the result? There’s not enough homes up for grabs, resale-wise. Dietz says it’s like having only half the inventory you’d expect.
And guess what? Lawrence Yun, the chief economist at the National Association of Realtors, has his hand up too. He’s noticed that “There are simply not enough homes for sale.” Even the usual life-changing events aren’t getting people moving as much. So, no surprise, home sales in June took a nosedive – down 18.9% from the year before.
Here’s a fun twist – mortgage rates are like BFFs with the 10-year Treasury yield. That yield’s been inching up lately, mostly because folks think the Federal Reserve will keep interest rates higher for longer to tackle the inflation beast. The 10-year yield jumped to 4.3%, just a day after the Fed spilled the beans on its recent meeting.
In a nutshell, the world of mortgages is putting on a rollercoaster show. Dreaming of a house? Well, hold onto your hats because it’s becoming quite the adventure. From snagging a deal to selling off, the game’s changing, and it’s getting a bit wild out there.