Interest rates on the most common types of mortgages have just soared again.
According to Mortgage News Daily, average interest rates on 30-year fixed mortgages rose sharply on Friday, rising 24 basis points to 4.95%. It is now 164 basis points higher than it was a year ago.
Mortgage News Daily COO Matthew Graham said: ..
Interest rates reached 4.72% on Tuesday, rising 26 basis points from March 18. The faster-than-expected rise in interest rates weighed on demand for mortgages and refinancing loans.
Interest rates soared as yields on 10-year US Treasuries also rose. Mortgage rates aren’t perfect, but they roughly follow those yields. Mortgage rates are also affected by the demand for mortgage-backed securities. The Federal Reserve is reducing holdings of these assets and raising interest rates.
It couldn’t come at the worst time, as the very important spring housing market has begun. Potential buyers are already facing very tight supplies and ultra-high prices. With significantly higher prices and prices, the median mortgage payments are more than 20% higher than they were a year ago.
Buyers are also facing all other inflation within their budget, which exacerbates the issue of affordability. Rents are also skyrocketing at record speeds, increasing the number of potential buyers who are unable to save money due to down payments. In addition, as interest rates rise, some buyers are disqualified from mortgages. Lenders are much more strict about how much debt a borrower can take in relation to their income.
Economists have already begun to revise their annual sales downwards. Lawrence Yun, chief economist at the National Association of Real Estate Agents, said Tuesday that he had previously predicted to stay at 4%, but this year he expects it to stay around 4.5%.
While NAR’s latest official forecast predicts a 3% decline in sales in 2022, Yun now forecasts a 6% to 8% decline in sales. The NAR has not officially updated its forecasts.