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Mortgage rates exceed 7% again

Umito
Mortgage rates exceed 7% again

With persistent inflation and rising bond yields, mortgage rates continue to rise. The Mortgage Bankers Association, whose numbers are often slightly higher than Freddie Mac’s, says the average rate for 30-year fixed-rate mortgages reached 7.09% late last week.

This is the first time the rate has exceeded 7% in several months and is one percentage point higher than it was in September.

“Bond yields in the United States and abroad continued to rise in response to concerns about a challenging inflation outlook and still-too-high budget deficits, which pushed mortgage rates higher for the fifth straight week ” said Joel Kan, MBA deputy chief economist.

“This time of year is a particularly volatile time in terms of application volumes. It may therefore be more useful to focus on the level rather than the percentage change. Purchase inquiries were 2% and refinances were 22% higher than a year ago.

“We anticipate that a gradual reduction in mortgage rates could thaw the market, encouraging more buyers and sellers to re-enter after a relatively stagnant 2024, Edward Asher, vice president of Treasury at Better.comtold ConsumerAffairs. “However, continued affordability issues in metro areas and a squeeze on new home construction could still put upward pressure on prices.”

Tenants could use a break

Mortgage rates have increased for five straight weeks, adding to the challenge for homebuyers. But even though it’s getting more expensive to buy a home, a report from real estate broker Redfin suggests that renting a home is becoming more affordable.

The median asking rent was down 0.1% from the previous month and 6.2% from its August 2022 record of $1,700 per month.

The median asking rent per square foot fell 1.9% year over year in December to $1.78, and 0.1% month over month. Rents are falling after a wave of apartment construction pushed up vacancy rates.

The December consumer price index shows that rents increased by 0.3% compared to November and by 4.3% year-on-year. Owner’s equivalent rent – ​​a category that measures the costs of homeownership – has been growing at a faster rate and will increase by almost 5% in 2024.