Borrowing costs for home loans have reached their highest point in 16 years, with interest on traditional 30-year mortgages at 6.7% as of Wednesday, according to Freddie Mac.
Mortgage rates have now more than doubled since the start of 2022. As measured by their “effective” rate, which factors in the compounding period for loans and which thus provides homebuyers a true picture of costs, mortgage rates are just above 7% according to Oxford Economics.
A one percentage point increase in a mortgage rate can add upFor the monthly payment of the property, depending on the size of the loan. They are cooling off an increasingly high cost housing market. According to the Mortgage Bankers Association, the number of mortgage loan applications declined by about 14% during the last week of September.
According to NerdWallet, a borrowing of $300,000 at a 6% rate on a typical mortgage would add up to $1,800 per month, including principal and interest. Earlier this year, when interest rates were around 3.5%, the same loan would equate to a monthly payment of $1,350.
House hunters in America have been hit this year with a one-two punch of skyrocketing mortgage rates and still-high home prices. The rising cost of homeownership is plaguing many aspiring buyers, who have instead opted to continue renting.
Some relief for buyers may be on the horizon, as home prices begin to fall and some real estate markets are likely to continue to decline, predict economists. home prices in Sacramento, California; Salt Lake City, Utah; and Seattle, Washington,,
Economists expect mortgage costs to remain high as the Federal Reserve continues to raise its benchmark interest rate in an effort to calm inflation, including two more hikes by the end of the year.