Per Mortgage News Daily, mortgage rates touched 8.03% on Wednesday, up from 7.69% the previous week. HousingWire’s Mortgage Rates Center showed Optimal Blue’s average 30-year fixed rate for conventional loans at 7.78% on Wednesday, compared to 7.52% the previous week.
Both indexes showed higher rates than the Freddie Mac‘s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, and recorded the 30-year, fixed-rate mortgage at 7.63% as of Oct. 19, up 6 basis points from the prior week. By contrast, the 30-year, fixed-rate mortgage was at 6.94% a year ago at this time.
Mortgage rates in the 8% range are further impacting already strained levels of affordability, Sam Khater, Freddie Mac’s chief economist, said in a statement.
“In this environment, it’s important that borrowers shop around with multiple lenders for the best mortgage rate,” Khater said. “With research showing down payment is the single largest barrier to first-time homebuyers attaining homeownership, borrowers should also ask their lender about down payment assistance.”
While high rates are stifling homebuyers, homebuilders are feeling the brunt as well, Khater noted.
“Incoming data shows that the construction of new homes rebounded in September but as rates keep rising, home builders appear to be losing confidence. As a result, we expect construction to trend down in the short-term,” he said.
Bob Broeksmit, the president and CEO of the Mortgage Bankers Association, said the organization expects rates to level off and fall over the next quarter.
“Mortgage application activity is now at its lowest level in 29 years as high mortgage rates, limited housing inventory, and affordability challenges continue to constrain borrowers,” he said in a statement. “While 2023 has been a tough time for the housing market, MBA expects that mortgage rates will moderate heading into 2024, which should bring some relief to those looking to buy a home.”
Still, inventory remains a huge problem for the housing market. Though inventory has ticked up of late, existing home sales are still down double-digits from last year and many homeowners are reluctant to give up sub 4% rates when borrowing costs are so high.
“With mortgage rates remaining near their 20-year high in recent weeks, homeowners are hesitant to list their properties,” Jiayi Xu, economist at Realtor.com said.