For the first time since March, the rate on the most popular US mortgage has risen beyond 7%.
According to Bankrate, the average rate for a 30-year fixed mortgage was 7.06% on Wednesday, up 12 basis points from the previous week.
Meanwhile, the mortgage’s Market Composite Index, which measures mortgage loan application volume, fell 4.6% year on year in the week ending May 19. It was the second weekly drop in a row.
The Federal Reserve’s rapid interest rate hikes have increased volatility in the rate-sensitive housing market, and the current landscape contrasts sharply with the pandemic-era low mortgage rates of around 3%.
Political uncertainty has also harmed the real estate market. Debt-ceiling talks in Washington DC are still stalled, and mortgage rates have risen in May, reflecting a jump in 10-year Treasury yields.
Experts have cautioned that the housing market has entered an ice age, and that people who do not already own a home may be priced out for the foreseeable future due to high prices, high mortgage rates, and a lack of inventory. Meanwhile, current homeowners have little motivation to move because doing so would entail giving up the lower mortgage rates they had acquired prior to the recent surge.
Housing market changes have also become very localized, with price swings differing greatly by location. For example, the price growth disparity between Miami and San Francisco is approaching a 30-year record, with prices in the Florida metro up 10.9% and down 10.1% on the west coast tech capital.
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