According to latest data from mortgage juggernaut Freddie Mac, the average 30-year mortgage rate has increased to 6.02%, the very first time the number has crossed 6% since 2008.
The Federal Reserve’s vigorous push to increase interest rates in an effort to combat inflation has resulted in the new rate level, almost double what it was at this time last year.
Increase in interest rates will damage home prices and drive down housing values, according to Sam Khater, chief economist at Freddie Mac.
Nevertheless, Khater predicted that home values won’t decline significantly due to a statewide housing shortage.
The National Association of Realtors said last month that the median value for residential properties increased to $403,800 in July from the same month the previous year by 10.8%.
“Home prices are still rising by double-digit percentages year-over-year, but annual price appreciation should moderate to the typical rate of 5% by the end of this year and into 2023. With mortgage rates expected to stabilize near 6% alongside steady job creation, home sales should start to rise by early next year.”Lawrence Yun, the National Association of Realtors’ chief economist
According to the Mortgage Bankers Association, the increased rates have led to a more than 80% decrease in renewal transactions from the previous year. More people are delaying buying a property, the company claimed in a statement on Wednesday.
Redfin, a real estate brokerage, announced last week that new property listings were down 18% from the previous year.
“The housing market always cools down this time of year, but this year, I expect fall and winter to be especially frigid as sales dry up more than usual.”Redfin Chief Economist Daryl Fairweather said in a statement
“Thanks largely to mortgage rates near or even above 6%, potential homebuyers and sellers are focusing on the back-to-school season and enjoying the last days of summer rather than getting into an uncertain market.”Daryl Fairweather
Information from NBC News