JB Reed | Bloomberg | beautiful pictures
It’s a double prize for those who are going to buy a home. Not only are interest rates rising, it’s getting harder and harder to qualify for loans.
The average interest rate on a popular 30-year fixed mortgage rose more than 7% last weekend, according to Mortgage News Daily, and is expected to hit around 7.125% on Tuesday. It was over 7% in a few days.
Meanwhile, mortgage credit availability is now at its lowest level since March 2013, when housing recovered slowly from the financial crisis late last decade. It fell for a seventh straight month in September, down 5.4% from August, according to a monthly index from the Mortgage Bankers Association.
Although lenders may be in dire need of business, mortgage demand fell due to higher rates, they are also more concerned about a weaker economy, which could lead to higher delinquency. Executives and economists have warned the US could fall into recession in the coming months when the Federal Reserve raises interest rates to fight high inflation.
“There is a smaller need for lower and higher credit scores [loan-to-value] Joel Kan, an economist with the Mortgage Bankers Association, said in a statement.
Currently, mortgage loans are near record lows. According to Black Knight, a mortgage software and analytics company that grew 15% from July to August, it is still 44% below pre-pandemic levels.
According to the Mortgage Bankers Association, credit availability fell the most for jumbo loans, which more borrowers today have to use due to higher home prices. Expensive There are also many borrowers turning to adjustable-rate mortgages, because they offer lower interest rates. These loans can be fixed for up to 10 years, but they are considered riskier mortgages.
Borrowers are clearly concerned that mortgage rates will be even higher. While mortgage rates don’t exactly follow federal funds rates, they are heavily influenced by Fed policy.
“The Fed is determined to raise interest rates as high as possible and keep them there for as long as possible, even if that means the economy,” Matthew Graham, chief executive officer of Mortgage News Daily, wrote on his website. affected”.
Graham noted that the Fed is not looking at mortgage rates or the housing market because home prices are overheating and the adjustment is “good and necessary.”
