📌 Mortgage rate races toward 8% after hitting a high not seen since late 2000. The average rate on the popular 30-year fixed mortgage rose to 7.72%, according to Mortgage News Daily. Mortgage rates follow loosely the yield on the 10-year Treasury, which has been climbing because the stronger economic data.
At the beginning of 2023, the 30-year fixed rate dropped to about 6%, causing a brief burst of activity in the spring housing market. But it began rising steadily again over the summer, causing sales to drop, despite strong demand. The current trend appears to be even higher, with the possibility of rates crossing over 8%.
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📈 Higher rates have crushed affordability, hitting both the new and existing home sales markets. While builders had been benefiting from the tight supply of existing homes for sale, higher mortgage rates are a major concern now. Builder sentiment slipped into negative territory in September for the first time in five months.
🛑 To put rates in perspective, for a borrower purchasing a $400,000 home with a 20% down payment on a 30-year fixed loan, the monthly payment today is about $930 more than it was when rates were at 3% during the height of the Covid-19 pandemic.
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