Mortgage rates have taken a sharp jump this week to levels not seen since 2008, with signs of a more aggressive hike from the Federal Reserve still looming.
Colin Smith with Flex Mortgage Brokers shared with News Talk 830 WCCO that rates for a 30-year fixed mortgage were about 3.25% to start the year, but as of yesterday, that number is now 6.28%.
Breaking it down in dollars, Smith shared that the increase from January to now is equivalent to around $550 more a month in payments.
But you don’t need to go back to the start of the year to see an increase, as just last week, the rate for the same mortgage was 5.55%, according to CNBC.
Still, some good is coming out of this as the housing market continues to cool, with home sales falling for the sixth straight month, according to the National Association of Realtors.
Smith shared that it’s a good thing houses aren’t selling as much as before because what we’ve seen for more than the last two years has not been normal.
“Days on the market longer, houses staying on the market for weeks and not hours,” Smith said. “This is all reflective that the housing market is returning to a sense of normality and not this insane bidding war that we’ve seen over the past 24 to 30 months.”
The rise in rates has also caused mortgage demand to plummet, but it has not done much to reduce sky prices for homes, driven by low supply and high demand.
Prices for homes have gone up just like almost everything, and according to CNBC, the average home is around 20% more expensive now than it was a year ago.
On top of the rising mortgage rates, the Federal Reverse announced an increase to key interests rate by .75% today, a move it has not made in almost three decades.