The rate on the 30-year fixed mortgage rose from 5.66% to 5.89% this week; a staggering 2.5 percentage points higher than at the start of the year. Should the mortgage rate hit 6%, it will be the highest rate that has been recorded since the 2008 recession.
Sam Khater, Freddie Mac’s chief economist, pins this surge on the effort to combat rising inflation. “Mortgage rates rose again as markets continue to manage the prospect of more aggressive monetary policy to combat elevated inflation,” Khater explained.
As a result, the demand for mortgages slumped to a 22-year low, with elevated borrowing costs and inventory shortages detracting potential buyers. Those buyers who remain in the market have consequently expressed less desire to make a bid on a property, thereby convincing property owners to reassess their asking prices.
Realtor.com reported that the median home price in the United States fell to $435,000 in August, down from July’s figure of $449,000. Robert Heck, the vice president of Morty, believes that this is only the start of the rise in mortgage rates following the increase at the start of 2022.