A Bloomberg survey of economists in mid-June revealed that they expect the Federal Reserve to lower interest rates by the end of 2024. Rates have risen so far that the average homebuyer who buys a property at the average price will now spend more than a quarter of their annual income on mortgage payments alone, according to Capital Economics Calculations. If rates drop, borrowers could refinance their ARM into a longer-term loan with a lower rate. The housing market is starting to take a turn, with higher mortgage rates devaluing or discouraging prospective homebuyers. The rate hike has led to a drop in the volume of mortgage applications, which reached a 22-year low earlier this month.
The interest rate on a 30-year fixed mortgage averaged 5.25% this week, up from 5.3% a week ago, home finance giant Freddie Mac reported Thursday. Rising mortgage rates (which have gone from about 3.3% at the beginning of the year to about 6% in six months) is likely to take some buyers out of the market and slow down rising home prices. Any slowdown caused by higher mortgage rates will make the market a little easier for buyers who are patient, Fairweather says. Rates have risen steadily as the Federal Reserve raises its benchmark interest rate to combat rampant inflation, most recently rising three-quarters of a percentage point higher than normal.
While Fed rate hikes do not directly affect mortgage rates, all forms of indebtedness are becoming more expensive as the market adjusts to expectations of tighter monetary policy and the possibility of a resulting recession for the US economy. However, we've also argued that house prices will come under pressure if mortgage rates rise above 6%, Pointon said. Mortgage rates are now so high, combined with record home prices in the nation, that aspiring homebuyers are simply left out. A closely followed forecast shows that the 30-year average mortgage rate peaks this quarter and then moderates or falls slightly over the next year.
The average rate for a 15-year fixed-rate mortgage fell to 4.43%, up from 4.48% a week ago, says Freddie Mac. SALT LAKE CITY Now that mortgage rates have risen to the 6% threshold, a global research firm says U.