Another weekly jump in borrowing costs appears to be making prospective home buyers jittery.
Home sales have been on the rise, but the recent uptick in mortgage rates could threaten that trend. The 30-year fixed-rate mortgage rose to a 6.93% average this week as mortgage applications—a gauge of future home buying—dropped to their slowest weekly pace in nearly a year.
“In the first full week of the new year, the 30-year fixed-rate mortgage remained elevated at just under 7 percent,” says Sam Khater, Freddie Mac’s chief economist. “The continued strength of the economy has put upward pressure on mortgage rates, and along with high home prices, continues to impact housing affordability. The lack of entry-level supply also remains an issue, especially for those looking to become first-time homeowners.”
Indeed, mortgage rates hitting a six-month high “will plague first-time buyers who are more rate sensitive,” adds Jessica Lautz, deputy chief economist at the National Association of REALTORS®.
At this week’s 6.93% rate average, a monthly mortgage payment would be about $2,114 on a home priced at $400,000, assuming a 20% down payment. With a 10% down payment, a buyer could face a monthly payment of $2,378, Lautz says.
The recent rate increase may further hamper housing affordability, but current homeowners looking to move may be less rate-sensitive, Lautz says. “Homeowners are making trades with housing equity gains, offsetting higher mortgage rates,” she notes. A typical homeowner has accumulated $147,000 in housing wealth just over the last five years, according to NAR’s research.
Mortgage Rates This Week
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 9:
- 30-year fixed-rate mortgages: averaged 6.93%, up from last week’s 6.91% average. This time last year, 30-year rates averaged 6.66%.
- 15-year fixed-rate mortgages: averaged 6.14%, up from 6.13% last week. A year ago, 15-year rates averaged 5.87%.
Source: nar.realtor
