MARKET UPDATE
Mortgage rates jumped again this past week, surpassing the 6% mark and reaching the highest level since the fall of 2008. This could accelerate the market correction, which is already well underway, by making purchasing a home even more expensive for cash-strapped buyers, pricing many completely out of the market. The 30-year fixed-rate mortgage averaged 6.02% in the week ending September 15, up from 5.89% the week before, according to Freddie Mac. That is significantly higher than this time last year, when it was 2.86%.
The consumer price index, a federal government measure of inflation, was up 8.3% in August compared with a year ago, according to the Bureau of Labor Statistics report released on Tuesday. Inflation fell from an 8.5% year-over-year increase in July and 9.1% in August. Yet it’s not enough of a drop to prevent the U.S. Federal Reserve from continuing to hammer the economy. And the Fed’s actions are likely to push mortgage rates up even higher.
The Fed is expected to hike its short-term interest rates at its meeting next week. Mortgage interest rates are separate but typically follow the same trajectory as the Fed’s rates. So when the Fed jacks up its rates in an effort to make borrowing money more expensive and weaken demand for products and services, mortgage rates generally tick up as well.
With rates essentially double where they were a year ago, applications for home loans have dropped and applications to refinance into a lower payment have fallen off a cliff, down 83% from a year ago, according to the Mortgage Bankers Association. Despite rising interest rates, home ownership is still a financially sound investment. CoreLogic analysis shows U.S. homeowners with mortgages (roughly 63% of all properties*) have seen their equity increase by a total of over $3.6 trillion since the second quarter of 2021, a gain of 27.8% year over year.
While it may seem impossible to purchase a home right now, there may be some actions you can do to help yourself. Give me a call so we can go over your situation.
Mary Cockburn/505-639-2090/MaryCockburn.Realtorgmail.com
