Home / Business / Mortgage rates are rising as the housing market loses its mojo

Mortgage rates are rising as the housing market loses its mojo





Bloomberg News / Landov

A house for sale in a suburb of Birmingham, Alabama. Home sales in the US are slowing as lean inventory is causing buyers to lose their lives and prices are rising. Mortgage lending rates rose along with the broader bond market, again putting mortgage lending under pressure, even as housing market growth faltered.

The 30-year fixed-rate mortgage averaged 4.60% in the week of 2 August, according to weekly data from mortgage lender Freddie Mac. The 1

5-year fixed rate mortgage averaged 4.08%, and the 5-year Treasury Indexed Hybrid Variable Rate Mortgage averaged 3.93%. All three products rose six basis points during the week. It was the second weekly win for the popular 30-year Fixed.

Mortgage rates follow the path of the 10-year US Treasury note

TMUBMUSD10Y, -0.31%

which has risen sharply as investors shook off the fear of war. The Treasury Department announced that it will increase the amount of debt it sells in its next refund auction and is about to borrow more than $ 1 trillion in that fiscal year, most since 2012.

This additional offer will partly because of the larger deficits caused by last year's tax cut package. But a larger supply is likely to push down bond prices, and as bond prices fall, yields will rise.

The recent rate hike comes even as momentum in the real estate market seems to spit. The sale of privately owned homes in June fell to its lowest point in five months, and sales of newly built flats also collapsed. Even the white price growth of recent years seems to be slowing down.

As MarketWatch reported in June, analysts increasingly believe that the current real estate cycle may have taken its course.

Reading : We're probably home. Here's what that means.

A survey conducted by the National Association of Home Builders in the second quarter found that 69% of potential homebuyers expect their home searches to be harder or remain roughly the same. About the same amount, 63%, said they see less or the same number of homes they would buy compared to three months before that, another sign of limited inventory – and buyers notice that.

"Even with some markets, price growth will ease off, and mortgage rates near a 7-year high will certainly be affordable for some potential buyers," said Sam Khater, chief economist at Freddie Mac ,


Source link