Long-term U.S. mortgage have restarted to climb. More sales are being canceled.
Consumers have been staring down one of the fastest increases in mortgage rates in decades. Continue reading at realestate.boston.com.
(Bloomberg) — Mortgage rates in the United States rose, resuming an upward climb that threatens to cool the housing market further.
The average for a 30-year loan jumped to 5.51% from 5.3% last week, Freddie Mac said in a statement Thursday. It’s up from3.11% at the end of last year.
Consumers have been staring down one of the fastest increases in mortgage rates in decades, a run that’s started to soften the market. That’s led to more buyers shying away from the house hunt, given the increased rates and high prices.
The slowdown has been particularly pronounced in areas that were previously booming, including Bay Area cities such as San Francisco and San Jose in California. Nationwide, a higher percentage of home sales are being canceled, with that measure ticking up in June to the highest level since April 2020, according to Redfin Corp. Nearly 60,000 home sales fell through, and that includes 9.6% of pending contracts in metro Boston, 10.5% in Providence, 11.9% in Worcester, 8% in Portland, Maine, 12.5% in Hartford, 13.3% in Bridgeport, Conn., and 14.8% in New Haven, Conn..
“Mortgage rates are volatile as economic growth slows due to fiscal and monetary drags,” said Sam Khater, Freddie Mac’s chief economist. “With rates the highest in over a decade, home prices at escalated levels, and inflation continuing to impact consumers, affordability remains the main obstacle to homeownership for many Americans.”
Markets have been reacting to inflation that reached a fresh four-decade high in June and risks of a more uncertain economic outlook. The high inflation print has spurred speculation that Federal Reserve officials might have to consider a 100 basis-point hike at the meeting later this month. JPMorgan Chase & Co.’s Jamie Dimon warned Thursday that there’s a serious set of issues the economy faces.
“The Fed has been walking a tightrope of gradually increasing borrowing costs while trying to avoid a knee-jerk reaction from consumers and businesses,” George Ratiu, Realtor.com’s manager of economic research, said. “However, with inflation soaring, the runway for a soft landing is shrinking considerably, as are the chances of avoiding a recession.”
At the current 30-year average, a borrower with a $300,000 mortgage would pay $1,705 a month, roughly $422 more than at the end of last year.
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