Average U.S. mortgage rates rise; 30-year loan breaches 4%
Source: AP
WASHINGTON (AP) Average long-term U.S. mortgage rates rose this week as the key 30-year loan vaulted over 4% for the first time since May 2019.
The increase came amid expectations that with inflation at a four-decade high, the Federal Reserve would raise its benchmark short-term interest rate at its policy meeting this week to cool the economy. That action came Wednesday, as the Fed increased the key rate which it had kept near zero since the pandemic recession struck two years ago by a quarter point. And the central bank signaled potentially up to seven additional rate hikes this year.
The increases mean that mortgage rates likely will continue to rise over the year.
Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year loan this week jumped to 4.16% from 3.85% last week. Thats a sharp contrast from last years record-low mortgage rates of under 3%. A year ago, the 30-year rate stood at 3.09%.
A sold sign is shown in front of a home, Monday, Sept. 20, 2021, in Surfside, Fla. Average long-term U.S. mortgage rates rose this week as the key 30-year loan vaulted over 4% for the first time since May 2019. Mortgage buyer Freddie Mac reports, Thursday, March 17, 2022, that the average rate on the 30-year loan this week jumped to 4.16% from 3.85% last week. (AP Photo/Wilfredo Lee)
Read more: https://apnews.com/article/business-economy-inflation-mortgages-mortgage-rates-acea60a272e9ac1c9c5b5e635f2c2657
PSPS
(13,512 posts)Higher interest rates give the buyer and seller more room to negotiate.
Auggie
(31,054 posts)melm00se
(4,972 posts)and so many of the offers coming in are all cash offers and, as we all know, cash is king.
Many of the houses in my development that are being sold are from Canadians who are cashing out because they couldn't come down for 2 years and the health insurance they buy to cover them while here have experienced a rocketship rise in costs due to COVID.
twodogsbarking
(9,289 posts)followed by bankers being pardoned because there are just too many to prosecute.
progree
(10,864 posts)than a year ago.
A year ago, it says the average mortgage rate was 3.09%. On a $300,000 home, that's a $1,279/month principal and interest (P&I) payment for a 30 year fixed loan.
Now at 4.16% -- that's a $1,460/month payment.
That's 14.2% increase. A $2,172/year increase.
And that's not all. According to the latest Case-Shiller national home prices report, the average home price increased by 18.8% in the past year.
So on average that $300,000 home became a $356,400 home.
The P&I on a $356,400 home at 4.16% interest is $1,735/month
So in one year, thanks to the combination of higher mortgage rates and higher house prices, we have a 35.6% increase in the P&I payment.
The boost in prices helps the home seller of course (leaving aside that the home seller has to find another place to live, also at an inflated price compared to a year ago, so its not all joy and gravy).
The boost in the mortgage rate helps neither buyer nor seller, just the bank.