‘The housing market may have to go through a correction’: Mortgage rates hit 6.29%, Freddie Mac says

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number: US mortgage rates continue to rise, adding hundreds of dollars to potential homeowners’ costs.

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The hike in mortgage rates after the Federal Reserve raised interest rates again prompted the economy to face the worst inflation in 40 years.

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The 30-year fixed-rate mortgage average was 6.29% as of September 15, according to information Released Thursday by Freddie Mac.

That’s 27 basis points higher than last week – one basis point is equal to one-hundredth of a percentage point.

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A rate hike is bad news for potential buyers, as it potentially adds hundreds of dollars to their mortgage payments.

Mortgage Bankers Association President and CEO Bob Broxmit said in a statement, mortgage rates are now at their highest level since 2008.

The typical mortgage applicant’s monthly payment is $456 higher than in January, he said.

Given the rise in rates and the withdrawal of buyers, the average current home price in the US fell to $389,500 in August, from $403,800 the previous month. National Association of Realtors Said,

A year ago, the 30-year mortgage rate was 2.88%.

The average rate on a 15-year mortgage also rose last week to 5.44%.

Adjustable-rate mortgages averaged 4.97%, up from the previous week.

Sam Khatter, chief economist at Freddie Mac, said in a statement: “After jumping to the highest level of 10-year Treasury yields since 2011, the housing market is facing a downward spiral as mortgage rates rise again this week. “

“Influenced by higher rates, home prices are softening, and home sales have declined,” he said.

The country still faces a shortage of homes for sale. “A lot of homeowners are choosing not to sell at all, because they don’t want to face a tough housing market,” Redfin chief economist Daryl Fairweather told MarketWatch.

“And that means there are fewer homes in the market. So even though buyers are holding back, sellers are also holding back,” she said.

Meanwhile, mortgage applications surged in anticipation of further hikes in rates last week. Buyers are keen to hit the market before mortgage rates rise even higher.

Ultimately, home prices coming down as a result of higher rates and sellers reacting to lower demand is a “good thing,” said Federal Reserve Chairman Jerome Powell. during Wednesday’s press conference When he announced the rate hike.

“Housing prices were rising steadily,” Powell said.

“Long-term, we need to better align supply and demand, so that housing prices rise to reasonable levels … and people can buy homes again,” he said. “The housing market may have to undergo a reformation to get back to that place.”

Yield on 10-Year Treasury Note increased TMUBMUSD10Y,
3.709%
Up 3.6% in morning trading on Thursday.

Got ideas on the housing market? Write to Marketwatch reporter Aarti Swaminathan at [email protected]

Credit: www.marketwatch.com /

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