Average mortgage rates are creeping closer to 8%, piling more lousy news on top of recent sales declines and price spikes.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.63%, up from 7.57%. A year ago at this time, the 30-year FRM averaged 6.94%.
On Wednesday, the daily rate hit 8%, pointing to further average increases next week.
The 15-year fixed-rate rose to 6.92% from 6.89%. A year ago, it averaged 6.23%.
“Not only are homebuyers feeling the impact of rising rates, but home builders are as well. Incoming data shows that the construction of new homes rebounded in September but as rates keep rising, home builders appear to be losing confidence,” said Sam Khater, Freddie Mac’s Chief Economist. “As a result, we expect construction to trend down in the short-term.”
Though builders have tried to keep costs low by building smaller homes on less land, lower rates are necessary to make homes affordable again.
“To keep buyers interested, many builders have been offering upgrades or buying down mortgage rates,” Lisa Sturtevant, chief economist at Bright MLS, told CNN.
Home price growth for both new construction and existing homes is hitting new highs as affordably-priced homes on the market face fierce competition, exacerbating the impact of high rates.
“In this environment, it’s important that borrowers shop around with multiple lenders for the best mortgage rate. With research showing down payment is the single largest barrier to first-time homebuyers attaining homeownership, borrowers should also ask their lender about down payment assistance,” Khater added.
Freddie Mac recently launched DPA One, a tool for homebuyers searching for down payment assistance programs. Down Payment Resource, a platform for connecting buyers with assistance programs, onboarded six new lenders in September as more companies search for solutions for their homebuyers.
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