The 30-year fixed-rate mortgage rose to a 6.81% average, Freddie Mac’s latest national mortgage market data shows. The latest increase in mortgage rates translates into a $2,172 monthly payment on a typical single-family home and $1,888 for a typical condo, says Jessica Lautz, deputy chief economist at the National Association of REALTORS®.
“Interest rates near 7% are not only a consideration for housing consumers’ budgets,” but she adds there is also growing acceptance for this rate, Lautz says. “For now, this impacts who will want to sell their home and sweetens the opportunity for accidental landlords to hold onto current low-rate mortgages on existing units,” she says. “Unfortunately, potential first-time buyers, minority buyers and single buyers are all the ones who are struggling to enter the market.”
Indeed, the Mortgage Bankers Association reported in its latest report a decrease in Federal Housing Administration loans, which tend to be attractive to lower-income and first-time home buyers with low down payment options. “The decrease in FHA purchase applications contributed to an increase in the overall average purchase loan size to $432,700, its highest level since the end of this May,” says Joel Kan, an MBA economist, who added that more mortgage purchase activity is skewing on the higher end of the market.
The Federal Reserve voted on Wednesday to increase its benchmark short-term rates, which could press on borrowing costs for credit cards, car loans and more. Mortgage rates are not directly affected by the Fed’s rate but are also influenced by them.
Despite the Fed’s recent actions, consumer confidence appears unwavering, says Sam Khater, Freddie Mac’s chief economist. “Rising consumer confidence often leads to greater spending, which could drive more consumers into the housing market,” he adds.
Freddie Mac reports the following national averages with mortgage rates for the week ending July 27:
- 30-year fixed-rate mortgages: averaged 6.81%, rising from last week’s 6.78% average. Last year at this time, 30-year rates averaged 5.30%.
- 15-year fixed-rate mortgages: averaged 6.11%, up from last week’s 6.06% average. A year ago, 15-year rates averaged 4.58%.
