The increase in the cost of loans is driving down demand, as expected by the Federal Reserve, creating a little less competition in some markets. There is still a shortage of available housing. However, if these trends continue, we could see a real estate market that favors buyers before the end of the year, according to Black Knight, a mortgage and real estate analysis firm. With this combination of prolonged home searches and accelerated interest rate increases, it's vital that buyers facing this market keep their previous mortgage approvals up to date.
The average 30-year mortgage rate rose to 7.12 percent this week from 6.92 percent the previous week, according to Bankrate's national survey of large lenders. While there are interest rate averages, each bank has its own underwriting guidelines, so the interest rate for each bank may vary. With the 10-year Treasury yield moving above 4 percent, mortgage rates are about to rise and are reaching 20-year highs, says Greg McBride, chief financial analyst at Bankrate. While some housing experts say rates may not rise much this year, others say they will rise even higher, pointing to six consecutive weeks of rate hikes through September.
In today's environment, adjustable-rate mortgages may be more affordable than fixed-rate mortgages. Mortgage loan rates are caught in a tug-of-war between rising inflation and actions by the Federal Reserve to curb inflation, which has indirectly driven up rates. Projecting the trend in mortgage rates this month isn't particularly difficult, but it doesn't look like there's going to be any gifts either. This gives buyers the opportunity to get a home for less than the list price, or have sellers contribute to closing costs or pay mortgage points to lower those high rates a bit.
While rising interest rates on debt aren't good news for consumers, thankfully you can take advantage of higher interest rates on savings accounts and high-yield certificates of deposit (CDs). So how should homebuyers approach a housing market with stagnant home prices, but with interest rates at 15-year highs? Select spoke to two experts about the latest interest rate hike and how consumers, especially homebuyers, should think about it. Every week, Freddie Mac surveys lenders on the rates and points based on conventional and first-tier home purchase mortgages, with a loan-to-value ratio of 80 percent. The average mortgage rate for a 30-year fixed mortgage is 7.20%, more than double the 3.22% level at the beginning of the year.