×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Skip to main content
Tags: mortgage | rates | interest | inflation | federal

Mortgage Rates Soar Over 6 Percent for First Time Since Late 2008

mortgage concept illustration with house, calculator, pen and mortgage application

(Illustration 30649892 © Maksym Yemelyanov | Dreamstime.com)

By    |   Thursday, 15 September 2022 10:54 PM EDT

For the first time since the housing crisis of late 2008, mortgage interest rates have surged over 6%, more than double what they were just a year ago, The New York Times reported Thursday.

Amid rising inflation, coming in at 8.3% for August, the Federal Reserve has been raising interest rates since the start of the year.

Rates have already been hiked 2.25 percentage points in four moves up since May, and experts expect the Fed to hike rates yet again next week.

The typical mortgage payment is around $2,352 right now, which is 66% higher than the $1,416 of a year ago. The massive increase is due to both home price inflation and soaring mortgage rates, according to the report.

Beyond that, closing costs are higher due to inflation, along with property taxes, homeowner's insurance and mortgage insurance, which tends to be required for buyers who cannot afford to put 20% down at purchase.

Mortgage rates are not in sync with the Fed's interest rates but are influenced by them, and there is a squeeze being put on the once-hot housing market, according to the report.

"The housing market is the most sensitive to the Federal Reserve's policy," National Association of Realtors' chief economist Lawrence Yun told The Times. "High inflation requires the Fed to be even more aggressive than previously assumed, and, therefore, the broad bond market — including the mortgage market — has reacted."

Freddie Mac reported the average mortgage rate on a 30-year fixed-rate loan was 6.02% on Thursday, which is more than double the 2.86% during the same week a year ago. Freddie Mac began tracking mortgage interest rates in 1971.

Still, the number of homes on the market will meet the demand, according to Freddie Mac chief economist Sam Khater.

"This indicates that while home price declines will likely continue, they should not be large," he told The Times.

But experts say inflation and mortgage interest rates are strapping potential home buyers and might ultimately choke off the market.

"There is serious sticker shock," Redfin CEO Glenn Kelman told The Times. "It is just a really thinly traded market. It is hard to put deals together."

Kelman has noted it firsthand at Redfin, which has had to cut 8% of its workforce due to declining demand.

"Some people have decided: 'I just can’t buy a house. I am stepping back,'" Kelman told The Times. "Others are just spooked: 'I am worried about the stock market'; 'I am worried about my job and the broader economy.'"

With fewer people buying homes, the rental market will be flooded, which will force demand higher and raise the cost of renting homes, too.

"Rising rents significantly impact consumer price inflation," Yun told The Times. "In a sense, at least for the short term, raising interest rates will further push up inflation.

"Only by drastically boosting supply of homes, both apartments and for ownership, will housing prices and rents become manageable."

© 2022 Newsmax. All rights reserved.


Newsfront
For the first time since the housing crisis of late 2008, mortgage interest rates have surged over 6%, more than double what they were just a year ago, The New York Times reported Thursday.
mortgage, rates, interest, inflation, federal
490
2022-54-15
Thursday, 15 September 2022 10:54 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved
Download the NewsmaxTV App
NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved