Housing affordability remains a challenge as rates soar
Fixed mortgage rates rose for the fifth consecutive week, moving closer to 8%, according to Freddie Mac’s latest Primary Mortgage Market Survey.
As of October 12, the 30-year fixed-rate mortgage stands at 7.57%, a rise from the previous week’s 7.49%. Looking back a year, the rate was notably lower, averaging 6.92%. The 15-year fixed-rate mortgage hasn’t been spared either, now averaging 6.89%, a jump from the previous week’s 6.78% and significantly higher than the 6.09% recorded last year.
The continuous uptick in mortgage rates underscores the ongoing market and geopolitical uncertainty, said Freddie Mac chief economist Sam Khater. Potential homebuyers are not only navigating rising rates but also grappling with affordability issues.
“The good news is that the economy and incomes continue to grow at a solid pace, but the housing market remains fraught with significant affordability constraints,” Khater said in the report. “As a result, purchase demand remains at a three-decade low.”
According to the Mortgage Bankers Association, purchase loan applications remain almost 20% behind last year’s rate.
Doug Duncan, Fannie Mae’s chief economist, commented: “Mortgage rates persistently over 7% appear to be deepening the malaise consumers feel about the home purchase market. In fact, high mortgage rates surpassed high home prices as the top reason why consumers think it’s a bad time to buy a home, a survey first. Notably, the share of consumers expressing pessimism about homebuying conditions hit a new survey high in September, with 84% now indicating that it’s a bad time to buy a home.
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