The recent rise in mortgage rates has affected the market badly. The 30-year fixed home loan has reached 3.92% this week. The figures have increased from 3.69% last week: the market has witnessed the highest rates in the previous three years. The inflation rise is the prime factor behind sky-high mortgage rates; the homebuyers are forced to purchase homes at high prices. The new home buyers are among the worst affected. Yahoo Money reports that the mortgage applications for home purchases declined by 5.4% compared to the last week. The market poses formidable challenges for middle-income buyers.
Housing Market Faces A Ton Of Problems
Yahoo Money quoted Danielle Hale, chief economist at Realtor.com, who said, “First-time homebuyers can be pretty interest rate sensitive. Even if they aren’t buying the most expensive homes, they usually buy homes with lower incomes and often have a lower down payment available. For people purchasing in high-cost areas where home prices are high, a small change in mortgage rates can also have a sizeable impact on the extra dollars that you will need to spend.” The Mortgage Banker’s Association reports 4% mortgage rates on Wednesday. Economists predict higher rates in the future.
Yahoo Money reports that the mortgage loans have reached $453,000, the loan increase has surged the monthly payments by one-fourth of the original figure. The market surge is a prime area of concern for homebuyers and the government. The federal authorities need to check the inflation rates to restore the living standards of the public. The homebuyers have not refinanced their homes due to high mortgage rates; the reports showed a 9% drop in refinance applications last week. The applications have decreased 54% in the previous 24 months.
Next Year Might Be More Challenging
Yahoo Money quoted Len Kiefer, deputy chief economist at Freddie Mac, who said, “If you’re thinking about waiting until next year and that maybe rates are higher, but you’ll get a deal on prices – well, that’s risky. It may be more advantageous to purchase this year relative to waiting until 2023 at this time. If you haven’t locked in a rate already, and you’re one of the few borrowers who have has a rate over 4.5% percent, refinancing now may be advantageous.”