Taranga News

Breaking News for Nation and World


Mortgage rates have been stuck above 7% for more than a month

Mortgage rates remained above 7% again this week after core inflation came in higher than expected in August.

The average rate on a 30-year fixed mortgage rose this week to 7.18% That’s up from 7.12% last week, according to Freddie Mac. Rates have been above 7% for five consecutive weeks, and are likely to remain above that in the near term as the market anticipates the Federal Reserve’s interest rate decision next week.

Read more: What the latest Fed rate hike plan means for mortgage rates and loans

For home buyers, the story remains the same: Increased rates have made it unaffordable for some, while those looking are facing higher prices and limited inventory.

Experts say there is no possibility of any relief soon.

“As far as mortgage rates are concerned, there is no reason to expect any immediate change for the better,” Keith Gumbinger, vice president of HSH.com, told Yahoo Finance. “We will have more clarity after the next Fed meeting; no hike in policy rates is expected, but I think another hike is likely this year as growth, the labor market and inflation all remain either strong or Exceeds expectations.” “For some time now, despite high interest rates.”

As mortgage rates continue to rise above 7%, demand from homebuyers has decreased.

“Higher mortgage rates are dampening borrower demand, with mortgage applications for the first full week of September falling to the lowest level since 1996,” Bob Broeksmit, president and CEO of the Mortgage Bankers Association, said in a press statement. “Persistent affordability and housing inventory pressures are marginalizing potential buyers, and most homeowners have little incentive to refinance.”

There is no reason for homeowners to list their property for sale and lose their current mortgage rate for one that could be twice as high. This has made it difficult for buyers to find affordable homes.

For example, according to Altos Research, there were only 54,000 new contracts pending last week, down from 64,000 the previous week. This was 14% fewer new sales than last year’s Labor Day week, and 32% to 40% fewer sales than September 2021.

“There’s no way around it. Supply is limited, demand is limited. There’s no sign of sales volume picking up,” Mike Simonsen, CEO of Altos Research, wrote in the Altos blog.

A lack of inventory has also pushed up home prices despite declining demand.

Altos Research found that the median home price for the week ending Sept. 11 was $444,990, up 1% from a year earlier. Newly listed homes are priced at an average of $390,000, unchanged from last year.

View of a townhome for sale in Huntington Beach, listed for $1,100,000. (Alan J. Schaben/Los Angeles Times via Getty Images)

As far as rates go from here comes down to the Federal Reserve and its fight against inflation.

“Inflation is what is driving mortgage rates up,” Daryl Fairweather, chief economist at Redfin, told Yahoo Finance. “The Fed is really concerned about inflation and they’re not going to stop raising rates until they see that it’s really under control. They’re not going to hold out or start cutting rates until then “Until they see that inflation is actually falling.”

The Labor Department noted that the latest data on inflation this week showed that the inflation rate in August rose 0.6% from the previous month and was 3.7% higher on an annual basis. The year-over-year increase was slightly higher than expected and still above the Fed’s 2% target.

All eyes will be on what the Fed says at its next rate-setting policy meeting next week.

“Right now, it’s more about what the Fed has to say about their expectations about the path of monetary policy in the future, rather than whether another small increase in rates is coming,” Gumbinger said. “Even if it declines at some point, another quarter-point increase doesn’t move the needle much, because more than five percent increases have already happened.”

Gabriella is a personal finance reporter at Yahoo Finance. Follow him on Twitter @__GabrielaCruz,

Click here for real estate and housing market news, reports and analysis to inform your investment decisions,


Leave a Reply

Your email address will not be published. Required fields are marked *