The average long-term U.S. mortgage rate rose this week to just under 7%, the highest level since 2008. This is the third consecutive weekly increase, and it is a major setback for would-be homebuyers who are already facing affordability challenges due to a shortage of homes for sale.
The average rate on a 30-year fixed-rate mortgage is now 6.96%, up from 6.90% last week. A year ago, the rate averaged 5.22%. This means that a borrower with a $200,000 mortgage would pay about $1,500 more per month than they would have a year ago.
The high mortgage rates are being driven by a number of factors, including inflation, rising interest rates, and the ongoing war in Ukraine. Inflation is at a 40-year high, and the Federal Reserve is raising interest rates in an effort to cool it down. This is putting upward pressure on mortgage rates, as well as other types of loans. The war in Ukraine is also contributing to inflation, as it has disrupted global supply chains.
The high mortgage rates are making it more difficult for people to afford to buy a home, especially in markets where home prices are already high. This is likely to lead to a slowdown in home sales in the coming months. It could also lead to an increase in foreclosures, as some homeowners may be unable to afford their mortgage payments.
If you are thinking about buying a home, it is important to be aware of the high mortgage rates and how they will impact your monthly payments. You may want to consider waiting until mortgage rates come down before you make an offer on a home. You may also want to consider a shorter-term mortgage, such as a 15-year mortgage, which typically has a lower interest rate than a 30-year mortgage.
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