Average 30-year mortgage hits highest rate in more than a decade

Recent developments have not been good on the mortgage front.

The first came the news that mortgage applications fell 5% in the week ended April 15 compared to the previous week, according to the Mortgage Bankers Association.

And now comes the news that the average rate for 30-year fixed-rate mortgages rose to 5.11% in the week ended April 21, the highest level in 11 years.

The last rate was 5% a week earlier and 2.97% a year ago.

“Mortgage rates rose for the seventh consecutive week as Treasury yields continued to rise,” Sam Khater, chief economist at Freddie Mac, said in a statement.

“While spring is typically the busiest time to buy a home, rising rates have led to some volatility in demand.

“It continues to be a seller’s market, but buyers who remain interested in buying a home may find that the competition has softened moderately.”

Treasury Yield Rise

Among Treasuries, the 10-year yield climbed 0.18 percentage points to 2.85% in the week ended April 21. And many economists and investors expect the Federal Reserve to raise interest rates by 0.5 percentage points at each of its next two meetings.

“In a housing market facing affordability challenges and low inventory, higher rates also cause demand to buy homes to decline or lag,” said Mortgage Bankers economist Joel Kan. Association, in a press release.

“Home buying activity has been volatile in recent weeks and has yet to experience the typical recovery for this time of year.” His comments proved prescient.

A few days later, the National Association of Realtors reported that existing home sales fell 2.7% in March from February, leaving them down 4.5% from a year earlier.

Soaring home prices also dampened buying, with selling prices for existing homes jumping 15% in March from a year earlier to $375,000. This is the highest level since the NAR began tracking data in 1999.

Expensive cities

Among cities, the highest price increases in March occurred in Miami-Fort Lauderdale-West Palm Beach, Florida (37% yoy), Las Vegas-Henderson-Paradise, Nevada (35%) and in Tampa-St. Petersburg-Clearwater, Florida (+32%).

“The housing market is starting to feel the impact of sharply rising mortgage rates and rising inflation weighing on purchasing power,” NAR chief economist Lawrence Yun said in a statement. communicated.

“Yet homes are selling fast and home price gains remain in the double digits.”

Given expectations of continued rising mortgage rates, Yun expects existing home sales to fall 10% this year.

A silver lining in the clouds: Yun sees house price appreciation shrinking to around 5% this year.

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This story was originally published April 22, 2022 11:18 a.m.

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