30-year mortgage rates rise to 6.28%, up from 5.5% just a week ago

Mortgage rates have risen sharply this week, due to concerns about the possibility of stronger interest rate hike from the Federal Reserve rattled financial markets.

Follow Mortgage news daily. That followed a 33 basis point jump on Monday. Rate was 5.55% a week ago.

Jb Reed | Bloomberg | beautiful pictures

Rising rates have caused a dramatic change in the housing market. Mortgage demand fell sharply. According to the National Association of Realtors, home sales have fallen for six straight months. Rate hikes have so far hardly cooled red hot house prices driven by historically strong demand, driven by the pandemic, and record low supply.

Read more: Compass and Redfin announce layoffs as housing market slows

This week’s dramatic rate hike was the worst since the so-called mini-rare in July 2013, when investors sent Treasury yields spiked after the Fed said it would decelerate. bond purchases.

Matthew Graham, CEO of MND, wrote: “The difference at the time was that the Fed simply decided it was time to start unwinding some of the easy policies that were put in place after the financial crisis. “. “This time around, the Fed is in a state of runaway inflation panic.”

Mortgage rates have set more than a dozen record lows in the first year of the pandemic, as the Federal Reserve poured money into mortgage-backed bonds. It recently ended that support and is expected to start reducing its holdings soon.

That caused a rate increase starting in January, with the average rate starting the year around 3.25% and moving higher each month. There was a brief remission in May, but it was short-lived.

Higher home prices and rates have crushed home affordability.

For example, on a $400,000 home, with a 20% down payment, the monthly mortgage payment has increased from $1,399 in early January to $1,976 today, a difference of 577 dollars. That does not include homeowners insurance nor property taxes.

It also doesn’t include the fact that the house is about 20% more expensive than it was a year ago.

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