Rates have jumped this year at a pace not seen in decades.
“Mortgage rates have risen 1.5% in the last three months alone, the fastest three-month rise since May 1994,” said Sam Khater, chief economist at Freddie Mac. “Rising mortgage rates have slowed buying activity, so the monthly payment for those looking to buy a home is up at least 20% from a year ago.”
“At the end of the day, mortgage rates are on track to exceed 5%, a level not seen since February 2011, when the price of a typical home in the United States was just $166,000, less than the half the price of a typical home today,” he said. noted.
The sharp rise in mortgage rates since the start of the year could be a turning point for the housing market, Ratiu said.
“We entered 2022 on solid footing, with rising employment and wage growth driving demand for housing,” he said. “The shortage of inventory pushed prices to record highs even before the start of the spring season.”
But at current rates, buyers of a median-priced home are looking at monthly mortgage payments that are nearly $500 higher than a year ago, Ratiu said.
A silver lining, he said, is that some homeowners might finally put their homes up for sale.
But for many potential buyers, Ratiu said, “today’s mortgage rates are making it harder to afford a home this spring.”