The monthly mortgage payment on a $400,000 loan is about $2,470 compared to $1,660 a year ago, according to NAR.
After the Federal Reserve raised its key short-term benchmark rate by another three-quarters of a percentage point on Wednesday, the average for the 30-year fixed-rate mortgage climbed to its highest level in 14 years, remaining above 6% and hitting more home buyers’ pocketbooks. It’s the fifth time this year the Fed has taken aggressive action to try to tame 40-year-high inflation.
The 30-year fixed-rate mortgage jumped a quarter of a percent this week to a national average of 6.29%, Freddie Mac reports.
While mortgage rates are not directly tied to the Fed’s fund rate, the Fed’s action does often trickle down in some ways to rates. Mortgage rates are more closely connected to 10-year Treasury yields, which surged to their highest level since 2011, Freddie Mac reports. That has prompted mortgage rates to double or more their levels of a year ago.
The monthly mortgage payment on a $400,000 loan is about $2,470 compared to $1,660 a year ago, the National Association of REALTORS® reports. Owners may be locked into their current loans as mortgage rates rise, and the 3% rates from last year may not be back anytime soon, Nadia Evangelou, NAR’s senior economist and director of forecasting, says on the association’s blog. “While the nation is suffering from a severe housing shortage, lower mobility can make housing inventory even tighter and cause home prices to continue to escalate.”
“Rising mortgage rates have continued to slow housing market demand, resulting in slowing sales and slower home price appreciation,” adds Ruben Gonzalez, chief economist at Keller Williams. Indeed, existing-home sales slipped further in August, down about 20% compared to a year ago, NAR reported this week. NAR Chief Economist Lawrence Yun has blamed softening sales on escalating mortgage rates.
Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 22:
- 30-year fixed-rate mortgages: averaged 6.29%, with an average 0.9 point, up from 6.02% last week. Last year at this time, 30-year rates averaged 2.88%.
- 15-year fixed-rate mortgages: averaged 5.44%, with an average 1 point, rising from last week’s 5.21% average. A year ago, 15-year rates averaged 2.15%.
- 5-year hybrid adjustable-rate mortgages: averaged 4.97%, with an average 0.4 point, rising from last week’s 4.93% average. A year ago, 5-year ARMs averaged 2.43%.
Freddie Mac reports commitment rates along with average points to better reflect the total upfront cost of obtaining a mortgage