Bidenomics: Mortgage Rates Reach Clinton-Era Highs
The Cost of Financing a Home Surges to Highest Level in Over 20 Years
The average long-term U.S. mortgage rate has skyrocketed this week, reaching its highest level since December 2000.
The benchmark 30-year home loan now stands at 7.63%, up from 7.57% last week, according to mortgage buyer Freddie Mac.
Compared to a year ago, the rate has jumped from 6.94% to its current level.
Not only have borrowing costs on 15-year fixed-rate mortgages increased, but they have also risen to 6.92% from 6.89% last week.
A year ago, the rate was at 6.23%, Freddie Mac reported.
These rising mortgage rates have significant implications for borrowers, as they can add hundreds of dollars to monthly costs, making homeownership even more unaffordable for many Americans.
Furthermore, these high rates discourage homeowners who secured lower rates two years ago from selling their homes.
The average rate on a 30-year mortgage is now more than double what it was in 2022, when it was a mere 3.09%.
This marks the sixth consecutive week of increasing mortgage rates, with the weekly average rate on a 30-year mortgage remaining above 7% since mid-August.
It is now at its highest level since December 1, 2000, when it averaged 7.65%.
According to Sam Khater, Freddie Mac’s chief economist, “Mortgage rates continued to approach 8% this week, further impacting affordability.”
The combination of elevated rates and low home inventory has exacerbated the affordability crisis, resulting in near all-time high home prices, despite a 21% decline in sales of previously occupied U.S. homes in the first nine months of this year compared to the same period in 2022.
As rates have climbed, home loan applications have plummeted to their lowest level since 1995, according to the Mortgage Bankers Association.
Bob Broeksmit, CEO of the MBA, stated, ”Mortgage application activity is now at its lowest level in 29 years as high mortgage rates, limited housing inventory, and affordability challenges continue to constrain borrowers.”
However, there is hope for potential homebuyers as the MBA expects mortgage rates to moderate in 2024, providing some relief.
Mortgage rates have been rising in tandem with the 10-year Treasury yield, which serves as a guide for loan pricing.
Factors such as investors’ expectations for future inflation, global demand for U.S. Treasuries, and the Federal Reserve’s interest rate decisions can influence home loan rates.
The central bank has already raised its main interest rate to the highest level since 2001 in an effort to combat high inflation and has signaled that future rate cuts may be less significant than previously anticipated.
As a result, Treasury yields have reached their highest levels in over a decade, with the 10-year Treasury yield standing at 4.90% in midday trading on Thursday.
This is a significant increase from the 3.50% in May and the 0.50% seen during the early stages of the pandemic.
The Western Journal has reviewed this Associated Press story and may have altered it prior to publication to ensure that it meets our editorial standards.
The post Bidenomics: Mortgage Rates Soar to Highest Level Since Bill Clinton Was President appeared first on The Western Journal.
What impact do rising mortgage rates have on potential homebuyers and existing homeowners?
Iously owned homes in September.
For potential homebuyers, the surge in financing costs can make the dream of homeownership seem increasingly out of reach. With higher mortgage rates, monthly mortgage payments increase, making it more difficult for individuals and families to qualify for loans and purchase a home.
Moreover, the rising rates can also discourage existing homeowners from selling their properties. Homeowners who took advantage of historically low rates two years ago might hesitate to sell their homes now, as they would have to face higher financing costs if they were to buy a new property.
The impact of these escalating mortgage rates is visible in the housing market. Home prices continue to rise despite the decline in home sales. The limited supply of homes on the market, coupled with increased financing costs, has contributed to the affordability crisis in many regions across the United States.
Homebuyers are faced with greater obstacles as they navigate the competitive market. With higher mortgage rates, they may need to adjust their budget or consider purchasing smaller or more affordable properties. For some, the rising costs of homeownership can even force them to delay their plans of buying a home altogether.
As mortgage rates continue to climb, it remains uncertain when they will stabilize or decrease. For now, potential homebuyers and existing homeowners must carefully evaluate their options and assess the feasibility of purchasing or selling a property in light of the current financing conditions.
In conclusion, the cost of financing a home in the United States has surged to the highest level in over 20 years. The increase in mortgage rates has implications for both potential homebuyers and existing homeowners. Higher financing costs make it more difficult for individuals and families to afford homeownership, while also discouraging homeowners from selling their properties. The combination of elevated rates and low home inventory has contributed to an affordability crisis, resulting in high home prices. As the housing market faces these challenges, individuals must carefully consider their options and navigate the current financing conditions to make informed decisions about buying or selling a home.
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