Mortgage rates in US rise to highest in more than two decades
MORTGAGE rates in the US climbed to the highest since 2000, ramping up the pressure on potential buyers.
The average for a 30-year, fixed loan rose for a third week, reaching 7.31 per cent, up from 7.19 per cent last week, Freddie Mac said on Thursday (Sep 28).
Mortgage rates topping 7 per cent for the past seven weeks are hurting affordability for buyers and weighing on purchases. Contracts to buy previously owned homes slipped 7.1 per cent in August from a month earlier, according to the National Association of Realtors.
“Unlike the turn of the millennium, house prices today are rising alongside mortgage rates, primarily due to low inventory,” Sam Khater, Freddie Mac’s chief economist, said. “These headwinds are causing both buyers and sellers to hold out for better circumstances.”
Tightening inventory pushed home values to a record high in July, according to data released this week by S&P CoreLogic Case-Shiller. But price growth may have its limits. For the four weeks ending Sep 24, sellers dropped prices on roughly one in 15 homes for sale, the highest level since November, according to Redfin.
A buyer with a US$600,000 mortgage would be paying US$4,118 a month at this week’s average rate, 58 per cent more than in early 2022, before the Federal Reserve started hiking its benchmark rate.
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Buying a starter home is now more expensive than renting in all but three of the 50 top metro areas in the US, according to a Realtor.com study.
That “explains why buyer demand is likely to remain relatively low”, Realtor.com’s chief economist Danielle Hale said. BLOOMBERG
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