The 30-year fixed mortgage rate rose to 6.92 percent on Thursday, the highest rate in over 20 years.
According to data from Freddie Mac, after the 30-year-mortgage fixed mortgage rate declined by 0.04 percent from 6.7 percent on September 29 to 6.66 percent a week ago, it has since surged by 0.26 percent. The last time rates were this high was in the spring of 2002.
One year ago, the 30-year rate was at 3.05 percent and at 2.77 percent when President Joe Biden was inaugurated in January 2021.
“We continue to see a tale of two economies in the data: strong job and wage growth are keeping consumers’ balance sheets positive, while lingering inflation, recession fears and housing affordability are driving housing demand down precipitously,” Freddie Mac’s Chief Economist Sam Khater stated. “The next several months will undoubtedly be important for the economy and the housing market.”
While U.S. home prices decreased for the first time in nearly a decade in July, potential homeowners may still be deterred from selling their homes due to the increased rates.
If a buyer were to purchase a home for $500,000 with a 20 percent downpayment, they would expect approximately $3,034 in monthly payments and around $550,000 in interest over 30 years, according to Bankrate.com.
In August, U.S. sales of existing homes have already decreased for seven months straight — dropping by 0.4 percent since the previous month, Breitbart News reported.
Permits for building new homes have also been dropping, as developers are deterred from purchasing new land due to higher interest rates and the rising cost of materials for building a new home.
As mortgage rates continue to rise, combined with decreasing homebuilder sentiment, the nation’s current housing recession may be fueled even further.
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