Mortgage interest rates surpassed 7% this week, dealing another blow to potential homeowners who now face the highest borrowing costs since 2002.
Home mortgage rates have surged past 7%, hitting the highest level in more than 20 years and dealing another blow to Americans trying to break into the housing market.
But borrowing costs have been on the rise lately. Inflation is a major driver of mortgage rates and amid continued economic growth investors increasingly think inflation will prove stickier than they hoped.The difference between a 6.78% rate and a 7.09% rate adds an extra $133 to the monthly mortgage payment for an $800,000 house. Compared with where rates were in early February, today’s payment is $422 more for the same priced house.— just under this week’s levels — in fall of last year.
The rapid rise quickly sapped buyer borrowing power and caused home prices to fall. But today’s buyers face a different market — one where prices are rising.After rates fell into the 6% range this year, a fair number of first-time home buyers returned. But existing homeowners were less willing to list their homes and give up their sub 3% mortgages.In July, the average home price across the six-county Southern California region was $823,398, according to data from Zillow. That’s up 1.
If rates stay where they are today or climb higher, it could sap demand enough to stanch further price increases. But if higher rates keep even moreRick Palacios Jr., research director with John Burns Research and Consulting, said it typically takes a rapid rise in rates, rather than a slow climb, to significantly hit housing demand.
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