Home loan costs hit a 16-year high and interest rates on a 30-year conventional mortgage hit 6.7% on Wednesday, according to Freddie Mac.
Since the beginning of 2022, mortgage rates have more than doubled. Mortgage rates are now just above 7%, according to Oxford Economics.
An increase in the mortgage rate in percentage points can add up 14% in the last week of September, according to the Mortgage Bankers Association.to monthly payments for real estate, depending on the size of the loan. These dramatically high costs are cooling the housing market. The number of applications for mortgage loans decreased sharply
Borrowing $300,000 at 6% on a conventional mortgage would add up to $1,800 a month, including principal and interest, according to NerdWallet. Earlier this year, when interest rates hovered around 3.5%, the same loan would have had a monthly payment of $1,350.
U.S. house hunters have been hit hard this year by skyrocketing mortgage rates and continued high home prices. The rising cost of home ownership is deterring many ambitious home buyers who choose to continue renting instead.
“It is beginning to look as if home sales will fall to the point where only those who have no choice for family or work reasons will buy homes,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in the report.
Some relief for buyers may be on the horizon as home prices begin to fall and are likely to continue falling in some real estate markets, economists predict. Home prices in Sacramento, CA; Salt Lake City, Utah; and Seattle, Washington,.
Economists expect mortgage costs to remain high as the Federal Reserve continues to raise interest rates to cool inflation, including two more hikes before the end of the year.