Mortgage rate soars closer to 5% in its second huge jump this week
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According to Mortgage News Daily, the average rate on a 30-year fixed mortgage increased by 24 basis points to 4.95 percent on Friday.
Demand for mortgages and refinancing loans has been hampered by the faster-than-expected rise in rates.
The median mortgage payment is now more than 20% more than it was a year ago, thanks to much higher rates and prices.
The most common type of mortgage rate has risen yet again.
According to Mortgage News Daily, the average rate on a 30-year fixed mortgage increased by 24 basis points to 4.95 percent on Friday. It has now risen by 164 basis points from a year ago.
"That's the second time this week, putting this week on pace with the worst week since the 2013 taper tantrum — a record we didn't expect to be truly challenged until a few days ago," Matthew Graham, COO of Mortgage News Daily, said.
The rate was 4.72 percent on Tuesday, up 26 basis points from March 18. Demand for mortgages and refinancing loans has been hampered by the faster-than-expected rise in rates.
The rate rose in tandem with the yield on the 10-year Treasury note in the United States. Mortgage rates are influenced by the yield, although not fully. Demand for mortgage-backed bonds has an impact on mortgage rates as well. The Federal Reserve is reducing its holdings of these assets and raising interest rates at the same time.
It couldn't have happened at a more inconvenient time, as the crucial spring housing market gets underway. Potential purchasers are already confronted with a scarcity of inventory and exorbitant pricing. The median mortgage payment is now more than 20% more than it was a year ago, thanks to much higher rates and prices.
Buyers are often dealing with inflation in other areas of their finances, exacerbating the affordability problems. Rents are also rising at an unprecedented rate, making it difficult for more potential purchasers to save money for a down payment. Furthermore, if interest rates rise, some buyers will lose their ability to obtain a mortgage. Lenders have become increasingly stricter in terms of how much debt a borrower may take on in comparison to their income.
Economists are already revising their sales forecasts for the year downward. The National Association of Realtors' top economist, Lawrence Yun, said Tuesday that he expected the rate to hang around 4.5 percent this year, after earlier projecting it would remain at 4 percent.
Sales are expected to decline 3% in 2022, according to the National Association of Realtors, but Yun now predicts a drop of 6% to 8%. The National Association of Realtors has not changed its projection.