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Mortgage rates rise as housing availability approaches record-breaking

A “for sale” sign outside a house in Louisville, Kentucky.

Luke Sharrett | Bloomberg | Getty Images

The mortgage rate has just reached its highest level since 2009, and home prices remain double-digit gains. Now, almost every major U.S. housing market is historically cheaper, and availability is close to the worst point on record.

New estimates from mortgage technology and data provider Black Knight show that 95% of the top 100 home markets in the U.S. are cheaper than the long-term level. This figure was 6% at the beginning of the Covid pandemic. Thirty-seven markets are cheaper than ever.

Household price gains fell slightly in March, but were still up 19.9% ​​year-on-year. Compared to February, prices rose by 2.3%, the fifth time since the pandemic began that house prices have risen by more than 2% in a single month. Prices rose by 5.9% in the first three months of the year. Consumers are facing rising prices in a variety of categories, from real estate to aircraft to food.

The average rate of the well-known 30-year fixed asset started at 3.29% this year and reached 5.55% on Monday, according to the Mortgage News Daily. After the Federal Reserve meeting on Wednesday, rates could rise even further as markets receive more comments on the Fed’s intention to reduce inflation.

The possibility of buying a home has not been so bad since July 2006, when the rates were around 6.75%. Back then, about 34% of the median income was needed to cover the monthly mortgage payment, including capital and interest, for a home purchased with a 20% payment.

On April 21, this revenue ratio reached 32.5%. Historically, the ratio of over 21% has cooled the housing market, except for the last two years. The pandemic has created an anomaly in the housing market due to very high demand and very low supply.

If rates went up 50 basis points or house prices went up 5% more, the price of housing would be the worst on record, according to Black Knight. (Of these two factors, a 5% price increase is likely.)

In the housing market it is often said that consumers do not buy the price of the house, but the monthly payment. This payment is at an all-time high of $ 552 (up 38%) to $ 1,809 a year, and $ 790 (or 72%) since the start of the pandemic.

In the face of weaker convenience, consumers are suddenly turning to variable rate mortgages, which offer a lower interest rate. The ARM share of potential home buyer rate locks rose from 2.5% in December to almost 8% in March, according to Black Knight. Last week, that rate was more than 9%, according to the Association of Mortgage Bankers.

Mortgage rates rise as housing availability approaches record-breaking

Source link Mortgage rates rise as housing availability approaches record-breaking

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