The 30-year fixed mortgage jumped to 5.22% this week after ending the previous week at 4.99%. While this rate sits below June’s high of 5.81%, this is still a two percentage point gain since the start of the year.
This increase is a large factor that is contributing to the lack of affordability in the current housing market, with many property owners also putting off sales in anticipation of eased market conditions where they will be able to raise their asking prices thanks to an increase in demand.
According to Freddie Mac Chief Economist Sam Khater, the recent mortgage rate increase is a testament to the ongoing volatility of the property market. “Declines in purchase demand continue to diminish while supply remains fairly tight across most markets. The consequence is that house prices likely will continue to rise, but at a slower pace for the rest of the summer,” Khater commented.
The heightened mortgage rates have left prospective property buyers hesitant to make purchases, particularly owing to the resulting heightened borrowing costs. According to a Fannie Mae survey, only 17% of buyers believe that now is an opportune time to purchase a home; a 20% decline from the previous month.