The average US homeowner saw their monthly mortgage payment increase by 15 percent or $337, according to a shocking new report from red fin.
The report goes on to say that the rise in mortgage rates of about seven percent is the highest since July 2007, shortly before the crash that triggered the Great Recession.
This is causing potential home buyers to chicken out and decide not to buy in today’s market.
Also, homes are staying on the market longer, causing homeowners to drop prices to the highest level since 2015.
Since January, pending sales have not been at their current low, while the number of homes selling below market rates is at its highest level since 2020. While new homes for sale are down a 14 percent from the same time in 2021.
Redfin’s Jason Aleem is quoted in the report as saying, “It is imperative that home sellers react quickly and aggressively as the market changes.”
He continued: ‘This means adjusting your price right away if you want to be competitive and attract bids from a smaller pool of qualified buyers. If your house is not the ‘belle of the ball’ in your neighborhood, you will have to reduce the price to sell it.’
According to the Redfin report, the rise in mortgage rates of about seven percent is the highest since July 2007, shortly before the crash that triggered the Great Recession.
One of Redfin’s key indicators of the decline in potential buyers is the fact that “homes for sale” as a Google search term dropped 33 percent this September compared to the same period last year.
New home listings are down 14 percent from a year ago.
One of Redfin’s key indicators of the decline in potential buyers is the fact that “homes for sale” as a Google search term dropped 33 percent this September compared to the same period last year.
Other factors, such as home tour requests, have dropped along with mortgage purchase requests.
At the time of this writing, the median home price in the United States is $369,250, an increase of seven percent year over year.
Sales prices in crime-ridden San Francisco are down 4 percent, while those in New Orleans are down 11 percent.
Mortgage buyer Freddie Mac reported Thursday that the key 30-year average rate rose to 6.70 percent from 6.29 percent last week. By contrast, the rate stood at 3.01 percent a year ago.
The average rate on 15-year fixed-rate mortgages, popular with those looking to refinance their homes, jumped to 5.96 percent from 5.44 percent last week.
Rapidly rising mortgage rates threaten to push out more homebuyers after more than doubling in 2022. Last year, would-be homebuyers expected rates well below 3 percent.
Freddie Mac noted that, for a typical mortgage amount, a borrower who locked in at the high end of the weekly rate range over the past year would pay several hundred dollars more than a borrower who locked in at the low end of the range.
Seattle’s housing market is slowing faster than any other in the country, a new study has revealed, as cash-strapped buyers increasingly turn away from home purchases.
Last week, the Federal Reserve raised its benchmark interest rate by another three-quarters of a point in an effort to tighten the economy, its fifth increase this year and the third consecutive rise of 0.75 percentage point.
Perhaps nowhere is the effect of the Fed’s action more apparent than in the housing sector. Existing home sales have been in decline for seven straight months as rising borrowing costs put homes out of reach for more people.
The government reported on Thursday that the US economy, battered by rising consumer prices and rising interest rates, shrank at an annual rate of 0.6% between April and June. That was unchanged from the previous estimate for the second quarter.
Fed officials have forecast they will raise their benchmark rate further to about 4.4% by the end of the year, one point higher than they had forecast in June. And they hope to raise the rate again next year, to around 4.6%. That would be the highest level since 2007.
By raising lending rates, the Federal Reserve makes it more expensive to get a mortgage and a car or business loan. So consumers and businesses presumably borrow and spend less, cooling the economy and slowing inflation.
Mortgage rates don’t necessarily reflect Federal Reserve rate increases, but they do tend to track the yield on the 10-year Treasury note. That’s influenced by a variety of factors, including investor expectations about future inflation and global demand for US Treasuries.
