30-year mortgage rate jumps to 6.28% from 5.5% just a week ago - Reuters news in France and abroad

30-year mortgage rate jumps to 6.28% from 5.5% just a week ago – Reuters news in France and abroad

Mortgage rates jumped sharply this week as fears of a more aggressive interest rate hike by the Federal Reserve rattled financial markets.

The average price of a popular 30-year fixed-rate mortgage rose 10 basis points to 6.28% on Tuesday, according to daily mortgage news. This follows a 33 basis point rise on Monday. The rate was 5.55% a week ago.

GB RED | Bloomberg | Getty Images

Higher interest rates caused a sharp turnaround in the housing market. The demand for mortgages has decreased. Home sales have fallen for six straight months, according to the National Association of Realtors. So far, a rate hike has done little to cool home prices, which are fueled by historically strong, pandemic-driven demand, and record supply.

read more: Compass and Redfin announce layoffs as housing market slows

The sharp jump in interest rates this week is the worst since the so-called “taper tantrum” in July 2013, when investors pushed Treasury yields higher after the Federal Reserve announced it would slow bond buying.

“The difference at the time was that the Fed simply decided it was time to finally start unpacking some of the easy policies put in place after the financial crisis,” wrote Matthew Graham, chief operating officer of the Department of National Defense. This time, the Federal Reserve is in a panic in the face of hyperinflation. »

Mortgage rates hit more than a dozen record lows in the first year of the pandemic as the Federal Reserve pumped money into mortgage-backed securities. It has recently ended this support and is expected to start unloading its holdings soon.

This led to a rate hike that started in January, with the average overall rate starting at around 3.25% and rising monthly. There was a short reprieve in May, but it didn’t last long.

Higher house prices and tariffs have lowered the affordability of homes.

For example, on a $400,000 home, with a 20% down payment, the monthly mortgage amount has gone from $1,399 at the beginning of January to $1,976 today, a difference of $577. This does not include home insurance or property taxes.

It also does not include the fact that the house is about 20% more expensive than it was a year ago.

Leave a Comment

Your email address will not be published. Required fields are marked *