What will happen to mortgage rates next week? No one knows. What will happen over the next year? Likely lots of ups and downs but, ultimately, higher average rates.
CHICAGO – Mortgage rates are showing volatility as the economy slows and recession fears take center stage. The 30-year fixed-rate mortgage rose to an average of 5.51% last week, up from 5.3% the week before, according to Freddie Mac.
Homebuyers face rising costs across the spectrum. Inflation shot to a new 40-year high in June and is accelerating even faster than expected, according to Consumer Price Index data, raising the prospect of a recession. The CPI jumped 9.1% last month, leading to a spike in grocery costs, record-high gas prices and escalating rents. And monthly mortgage payments soared 51% year-over-year, according to data from the National Association of Realtors®.
“With the potential of a more aggressive rate hike from the Federal Reserve at the end of the month, mortgage rates will likely rise even further,” says Nadia Evangelou, NAR’s senior economist and director of forecasting. “However, even with this increase, mortgage rates will continue to be historically low – below 8% – in 2022.”
Homebuyers feel each upward bump in mortgage rates.
“Mortgage rates are volatile as economic growth slows due to fiscal and monetary drags,” says Sam Khater, Freddie Mac’s chief economist. “With rates the highest in over a decade, home prices at escalated levels and inflation continuing to impact consumers, affordability remains the main obstacle to homeownership for many Americans.”
Source: National Association of Realtors® (NAR)
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