Increasing mortgage rates have impacted the entire housing market as the buzz gradually cools off.
Compared to the previous week, mortgage interest rates for all types of loans have increased. As a matter of fact, the rates have been dramatically changing since January. Beginning, with 30-year fixed, to 15-year fixed, 5/1 ARMs, and jumbo loans, they all saw increases in their rates. The higher mortgage interest rates have got everyone talking and spread fears across the housing space.
Mortgage Interest Rates Surge
According to data compiled by Bankrate, the 30-year fixed mortgage interest rate has increased by over 6%, with the Federal Reserve cracking down on inflation. As of the 4th of October, the current average rate for a 30-year fixed mortgage rate is 7.06%. This represents a 47 basis points addition since the same time in the previous week. The current rate is about 2X over what it was at 3% this period in 2021. The more than 6% jump in 30-year mortgage rates is notably the highest since November 2008. At the current rates, affected individuals will have to pay principal+interest of $662.62 for every $100k loan. Meaning there is an extra $31.87 compared to last week.
The fear is these increases could continue for some time. Also, the central bank upping its own interest rates to counter high inflation is the primary contributor to the high mortgage interest rates. During its September meeting, the Federal Reserve once again added to its rates. Greg McBride, CFA, Bankrate’s chief financial analyst, had this to say:
“This cumulative effect of this sharp rise in rates has cooled the housing market and caused the economy to start slowing, but hasn’t done much to lower inflation.”
Apart from the 30-year fixed mortgage rate, the 15-year fixed mortgage rate has also grown from 5.80% in the past week to 6.16%. Additionally, 5/1 ARM moved from 4.90% to 5.25% in a week, and 30-year fixed jumbo loans went from 6.58% to 7.06%.
Higher Rates Stir Fears in Housing Market
Increasing mortgage rates have impacted the entire housing market as the buzz gradually cools off.
As a 15-year mortgage increases, principal and interest are about $607 on every $100,000. At the same time, a 5/1 adjustable rate mortgage would cost about $547 for each $100,000.
“All too often, some homeowners take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming. But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage.”
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Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
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