Experts say mortgage rates are rising and homes are still selling for more than the asking price
According to a new report from Redfin, average U.S. monthly mortgage rates are rising, with payments on homes jumping $50 over the past six weeks.
In recent weeks, the benchmark 30-year loan jumped over 3% for the first time since June, according to a real estate brokerage.
until 7 October, RAccording to mortgage buyer Freddie Mac, the rate for a 30-year loan is 2.99%, while the rate for a 15-year loan, a popular option for homeowners refinancing their mortgage, is around 2.33%.
“For now, mortgage rates are still hovering near 3% and demand remains strong,” according to Daryl Fairweather, chief economist at Redfin.
Realtor.com George Ratio, manager of economic research, cautioned that mortgage rates are on “an upward trajectory” and are already affecting the budgets of first-time home buyers.
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“At today’s rate, a homebuyer looking at an average priced home will spend $134 more per month on their mortgage payment, adding more than $1,600 per year to their payment,” he said.
According to Redfin, for now, though, homes are still selling very quickly, with about half finding a buyer within two weeks. In fact, homes are still selling for well above their asking price.
During the four-week period ending October 3, demand prices on newly listed homes set a new record, rising 12% annually to an average of $365,073, Redfin reported. Prices rose throughout the month of September, which Redfin noted is a “normal late-summer seasonal uptick”.
Due to rising housing costs, Ratiu forecasts that US home sales momentum will moderate for the final segment of the year.
Mortgage payments are becoming more and more unrecoverable
Fairweather is in agreement.
“We expect rates to remain in place over the winter months, and this could slow demand as early as the end of 2018,” Fairweather said. “As it happens, sellers will have a harder time cutting buyers on their skyrocketing prices.”
Redfin noted that there is already a growing share of listings whose prices have fallen, reinforcing the notion that the cap price hike may be slightly lower.