Mortgage rates in the US rose to their highest level since June, putting pressure on a housing market where demand has fallen sharply since its pandemic-era peak.
The average for a 30-year loan rose to 5.55 percent from 5.13 percent last week, Freddie Mac said in a statement yesterday. Except for a week in mid-June when interest rates rose 55 basis points, the latest rise is the steepest since 2013.
Interest rates followed a rise in 10-year Treasury yields, which topped 3 percent for the first time in a month this week. Investors are bracing for the next move from the Federal Reserve, which has raised interest rates to tame the hottest inflation in decades.
Soaring home prices and this year’s rise in mortgage costs have crowded out many potential buyers and deterred transactions in a rapid turnaround that sent shockwaves across the real estate industry.
Home sellers are lowering their asking prices and realtors are laying off staff. Builders are slowing the start of construction while increasing incentives to attract customers as inventories pile up.
With mortgage applications stuck at a 22-year low, some non-bank lenders are struggling to stay in business.
“The combination of higher mortgage rates and slowing economic growth is weighing on the housing market,” Sam Khater, Freddie Mac’s chief economist, said in the statement.
“Home sales continue to fall, prices are falling and consumer confidence is low. But with demand slowing, there are still potential homebuyers on the sidelines waiting to get back into the market.”
On the current 30-year average, a borrower with a $300,000 mortgage would be paying $1,713 a month, about $430 more than at the end of last year.
https://www.independent.ie/business/world/interest-on-average-us-mortgage-rises-to-55pc-as-treasury-yields-spike-41937855.html Average US mortgage rates rise to 5.5 percent as Treasury yields soar