The average interest rate on a 30-year fixed mortgage soared to 7.2% this week, its highest in a year and a half.Coupled with home prices near record highs, it’s putting the American dream of owning a home further out of reach for millions.“We don’t want to buy this big, beautiful house only to just sit in it, staring at each other, stressing about a mortgage payment every month,” said Alexandra DeCandia, who teaches biology at Georgetown University.DeCandia and her husband, Edward Schrom, both 33, are looking for their first home in the Washington area.
They hope to start a family and want to buy a home before they do.“It’s something that’s a huge decision and one that will impact us, as well as our future family,” DeCandia said.“It’s very stressful to try to figure that out in this shifting landscape.”Mortgage rates were on a downswing earlier this year, hitting 5.99% in late February.
But ever since the U.S.and Israel attacked Iran on Feb.
28, they have skyrocketed.Mortgage interest rates are heavily influenced by the yield on 10-year Treasury bonds, which has been rising as oil prices soar and drive up the cost of goods across the economy.And mortgage rates could keep rising.The Federal Reserve this week hiked its key interest rate in an effort to get a handle on inflation — and it suggested it may raise rates again this year.
Higher rates can drive up borrowing costs across the economy.Meanwhile, the average home price nationwide is near a record high, at $429,100 as of August.One bright spot for homebuyers, however, is inventory.There were 1.62 million unsold homes on the market in August, according to the National Association of Realtors.
That’s equal to 4.9 months’ supply, which is measured as the time it would take at the current pace of sales to sell all those homes.That is the highest level in more than a decade, and it gives prospective homebuyers more room to negotiate prices.A new housing development in Valencia, Calif...