1 week Ago By Jess Malcolm
Mortgage rates have soared to their highest levels since July, according to a major home loan mortgage corporation. The new figures have sparked fear among home buyers , with experts warning the rise will make homes more expensive and cause housing stock to dwindle further. Freddie Mac this week reported that a 30 year fixed rate mortgage was now 6.
91%, up from 6.85% last week and 6.62% a year ago.
Inching up to just shy of 7%, mortgage rates reached their highest point in nearly six months “Compared to this time last year, rates are elevated and the market’s affordability headwinds persist. “However, buyers appear to be more inclined to get off the sidelines as pending home sales rise.” Mortgage rates are also increasing at the same time house prices are continuing to rise.
Read more on house prices According to the Federal Housing Finance Agency , house prices in the US rose 5.7% over the past year. Senior real estate economist Patrick Duffy told The U.
S. Sun that homeowners looking to refinance to lower rates should wait it out until mortgage rates fell. He advised homeowners to stay put for as long as possible, and consider renovating their homes to further boost their home equity while waiting for future mortgage rates to come down.
"I can certainly understand frustration among would-be homebuyers and sellers, as rebounding mortgage rates close to the 7% level make buying a home more expensive at a time when home prices continue to rise due to limited supply,” Duffy told The U.S. Sun.
Most read in Money “It also pours cold water on those homeowners helping to refinance to lower rates. “As for what consumers can do today, if they opt to remain in place and renovate, home equity lines and loans are more tied directly to the Federal Funds rate, which may further boost their home equity as they wait for future mortgage rates to possibly drop again.” Duffy added that inflation may remain higher for longer given the “large share” that shelter costs contribute to CPI.
STICKY INFLATION The Fed in December signaled it would likely cut rates at a slower pace than was previously forecast in 2025. Inflation remains slightly sticky, hovering just over the Fed’s target of 2% despite falling from historic highs during the Covid pandemic . Climbing mortgage rates may also put a dampener on the housing market over winter, according to Realtor.
com ’s Senior Economic Research Analyst Hannah Jones. Jones said the winter market had “dipped more than in years past” largely due to soaring mortgage rates. “Winter buyers typically benefit from a more relaxed market pace and lower home prices, but climbing mortgage rates could dampen the season's typical savings,” Jones told The U.
S. Sun. “On-the-fence year-end buyers are likely to stay on the sidelines, hoping for lower rates and improved affordability next year.
" HIGHER FOR LONGER Weatherhead School Economics Professor Jonathan Erest noted that recent upticks in mortgage rates would disincentivise homeowners to put their house on the market, impacting supply. He said many mortgage holders had rates at 3.4% left over during the pandemic.
“This low supply, coupled with relatively few new homes being constructed, has kept the price of housing high. Read More on The US Sun “With housing making up more than a third of CPI, high home and rental prices have meant higher levels of inflation. “For consumers, this may mean a longer wait before lowering their payments by refinancing their mortgages, as rates stay elevated in the short term.
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