This week marks the fifth consecutive week for mortgage rate increases.
Home buyers are facing higher borrowing costs in the new year, with the 30-year fixed-rate mortgage jumping to a 7.04% average this week, according to Freddie Mac. It’s the first time that rates have crossed the 7% mark since last May.
The latest numbers on consumer prices, which were released this week, showed inflation rising in December. But housing economists note that rents and home prices are no longer increasing as sharply as in recent months, which could help to bring inflation down soon. “The conquering of inflation will be a key factor in bringing down mortgage rates, which, so far, have refused to budge, even as the Federal Reserve has been cutting other interest rates,” says Lawrence Yun, chief economist for the National Association of REALTORS®.
Yun expects mortgage rates to move slightly lower—“perhaps to 6.5% just in time for the spring homebuying season,” he notes.
In the meantime, Freddie Mac urges consumers to shop around for a mortgage, which can help save money on a loan. Lenders often quote different interest rates, so buyers would be wise not to automatically accept the first rate they’re offered.
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 16:
- 30-year fixed-rate mortgages: averaged 7.04%, rising from last week’s 6.93% average. A year ago, 30-year rates averaged 6.6%.
- 15-year fixed-rate mortgages: averaged 6.27%, increasing from last week’s 6.14% average. Last year at this time, 15-year rates averaged 5.76%.
At this week’s average of 7.04% for a 30-year fixed-rate mortgage, a home buyer could have a monthly mortgage payment of $2,138 (assuming a 20% down payment) on a $400,000 home. With a 10% down payment, the monthly mortgage payment would increase to $2,405, says Jessica Lautz, NAR’s deputy chief economist.
Source: nar.realtor
