April 21, 2024

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Mortgage rate close to 5% in its second big jump this week

Mortgage rate close to 5% in its second big jump this week

The most popular mortgage rate is up again.

The average 30-year fixed-rate mortgage rate rose significantly on Friday, rising 24 basis points to 4.95%, according to daily mortgage news. It is now 164 basis points higher than it was a year ago.

“This is the second time this week, and it puts this week on par with the worst week of the 2013 taper tantrum – a record we hadn’t seen a few days before there was a legitimate challenge,” said Matthew Graham, COO of Mortgage News Daily. .

Tuesday, The rate was 4.72%.a jump of 26 basis points from March 18 Demand for mortgage loans and loan refinancing.

The price went up with the higher return on US Treasury for 10 years also took off. Mortgage rates track this yield loosely, but not completely. Mortgage rates are also affected by the demand for mortgage-backed securities. The Federal Reserve is reducing its holdings of these assets and Is also raising interest rates.

It couldn’t come at a worse time, as everything matters Spring begins housing market. Potential buyers are already facing an unusual shortage of supply and high prices. With both rates and rates skyrocketing, average mortgage payments are now 20% higher than they were a year ago.

Buyers also face inflation with everything else in their budgets, which exacerbates affordability issues. Rents have also been rising at a record rate, causing more potential buyers to be unable to save money for a down payment. Additionally, with higher interest rates, some buyers will no longer qualify for a mortgage. Lenders have been stricter about how much debt a borrower may take on in terms of income.

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Economists have already begun to revise their sales numbers lower for the year. Lawrence Yun, chief economist at the National Association of Realtors, said Tuesday that he expects the rate to hover around 4.5% this year, having previously forecast it will stay at 4%.

NAR’s latest official forecast is for sales to fall 3% in 2022, but Yoon now says he expects to drop 6% to 8%. NAR has not officially updated its forecast.