Residential Real Estate News
U.S. Mortgage Rates Exceed Six Percent in Mid-September, First Time Since 2008
According to Freddie Mac, U.S. mortgage rates continued to rise alongside hotter-than-expected inflation numbers this week, exceeding six percent for the first time since late 2008. Although the increase in rates will continue to dampen demand and put downward pressure on home prices, inventory remains inadequate. This indicates that while home price declines will likely continue, they should not be large.
The National Association of Realtors senior economist Nadia Evangelou commented, "Mortgage rates surpassed 6% this week. According to Freddie Mac, the 30-year fixed mortgage rate rose to 6.02% from 5.89% the previous week. Unyielding inflation continues to push up mortgage rates, reaching their highest level since 2008. As a result, the monthly mortgage payment has increased about 60% compared to a year ago. There is no doubt that these higher rates hurt housing affordability. Nevertheless, apart from borrowing costs, rents additionally rose at their highest pace in nearly four decades.
Although first-time buyers need to spend about $100 more for their monthly mortgage payment than their rent, first-time home buyers should consider that their monthly mortgage payment is not adjusted to inflation. This means the monthly mortgage payment remains the same during the loan period. However, if rents rise about 5% for the next couple of years, these buyers will have to pay about $100 extra for their rent than their current monthly mortgage payments.
