For the first time since 2011, mortgage rates reached 5.0%, according to Freddie Mac’s latest weekly survey for the week ending…(Freddie Mac)
- 30-YR FIXED: The average rate was up 28 basis points to 5.0% which is a whopping 196 basis points higher than one year ago. Wow.
- 15-YR FIXED: Average rate was up 25 basis points to 4.17% which is now 182 basis points higher than one year ago.
Sam Khater, Freddie Mac’s Chief Economist, was blunt with his analysis…
- “As Americans contend with historically high inflation, the combination of rising mortgage rates, elevated home prices and tight inventory are making the pursuit of homeownership the most expensive in a generation.”
George Ratiu, an economist at Realtor.com, broke down the numbers in the Wall Street Journal…
- “A year ago, buying the median American home at prevailing rates meant a monthly mortgage bill of about $1,223 after a 20% down payment,…At recent rates, such a purchase would require a monthly payment of nearly $1,700—a 38% increase.”
Rising rates, until now, have shown no sign of slowing demand for housing. However, new data from Redfin, finds that 5% might be the magic number. Redfins reports that “on average, 3.2% of homes for sale each week had a price drop, with 13% dropping their price in the past four weeks. That’s up from 10% a month earlier and 9% a year ago.” On top of that, Redfin also reports that “fewer people searched for ‘homes for sale’ on Google—searches during the week ending April 9 were down 3% from a year earlier.”
Inventories are still at historic lows and the market will have to slow significantly more for inventory levels to get back to normal. However, it looks like rising rates are finally cooling things down to the point that concern over a housing bubble will slowly dissipate.