mortgage rates soar
Hey readers! Here's an interesting update; Did you know that mortgage rates have recently surged to their highest point in over 20 years? It's a big deal!
Let me break it down for you;
According to Freddie Mac, the 30 year fixed mortgage rate has climbed up to 7.09% this week. The last time it reached such levels was way back in April 2002. In fact, this is the third time since then that the rates have crossed the 7% mark.
Now, you might be wondering what caused this sudden increase. Well, it turns out that the Federal Reserve has been dealing with inflation issues since the beginning of the year. These rising rates are posing challenges for potential homebuyers, considering the already high home prices and limited options available. As a result, many homeowners are holding onto their current properties to enjoy their lower and more attractive mortgage rates.
Jim Tobin, CEO of the National Association of Home Builders, summed it up nicely when he said; "The Fed's attempts to control inflation appear to be affecting demand. A mortgage rate of 7% is making a lot of people stay on the sidelines or choose to stay put in their current homes."
And here's some disappointing news; the demand from homebuyers is dropping. According to the Mortgage Bankers Association, mortgage applications decreased by 0.8% in the week ending Aug. 11, which is a significant 26% decline compared to the same week last year. The main culprit behind this decline is the rising interest rates. Interestingly, there has been an increase in applications for adjustable rate mortgages, as they typically start with lower rates.
Jason Sharon from Home Loans Inc. Summed it up by saying, "It's challenging out here. The rates are at their highest point in twenty years and continuing to rise. People want to buy homes, but many are finding it difficult due to these prices and interest rates."
Len Kiefer, Freddie Mac's deputy chief economist, believes that for a positive shift in the current market dynamics to occur, the rates will need to decrease significantly. He stated, "If they don't decrease considerably, we're likely to see a historically low number of refinances and fewer homes being put up for sale."
Is there any good news? Well, there has been a slight increase (less than 1%) in unsold single family homes for the week ending Aug. 14; however, this number still remains 10% below last year's figures.
According to Mike Simonsen, an expert from Altos Research, it appears that the previous surge in housing market activity is gradually diminishing.
That concludes our update! We'll be sure to keep an eye on these developments. Remember, the housing market experiences fluctuations over time. Let's hope for some positive trends in the near future! 🏠✨
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