Another day, another dose of dismal economic news. This time it affects people looking to buy a house, which will cost more because mortgage rates have risen to their highest level since 2008.
Freddie Mac reported that the average 430-year loan rate rose to 5.78%, up from 5.23%, and believe it or not, just a year ago, the average was 2.93%.
The housing market had been on fire for a long time, but those days are in the rear view mirror. Sam Khater, the chief economist for Freddie Mac, said the same thing in a statement.
“These higher rates are the result of a shift in expectations about inflation and the course of monetary policy, Higher mortgage rates will lead to moderation from the blistering pace of housing activity that we have experienced coming out of the pandemic, ultimately resulting in a more balanced housing market.”
What’s making matters even more difficult for prospective home buyers is the sticker shock on home prices that matches the sick feeling they have after leaving their bank. According to a study by Moody’s Analytics, home prices are still steep, and the massive inflation is costing U.S. households an extra $460 per month.