“According to Freddie Mac, the rate for a 30-year fixed-rate mortgage has climbed to 7.09 percent, an uptick from the 5.13 percent it was at a year prior.
A mortgage rate is “the interest rate charged for a home loan,” and effectively the monthly cost of borrowing that money. As mortgage rates have gone up, monthly payments have gotten more and more pricey for people looking to purchase a home even if the base price of the house stays the same.
For example, under a 3.22 percent 30-year fixed mortgage rate in January 2022, the monthly payment on a $400,000 house in New York with a 20 percent down payment was $1,716, per a Bankrate calculator. Now, under a 7.09 percent mortgage rate in August 2023, the monthly payment on the same house with the same price would be $2,477.
Such costs have had an impact on the housing market: As mortgage rates have increased, some potential buyers have held off on purchasing houses, while sellers have similarly been less likely to list their property. For current homeowners, there’s a major incentive to wait until rates go down before deciding to re-enter the market and search for their next house.
“These higher mortgage costs are a tremendous barrier to entry for anyone wanting to enter the housing market,” Gregory Daco, the chief economist for Ernst & Young, tells Vox.”
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“One of the biggest factors in the rise in mortgage rates is the Fed’s approach to monetary policy, which includes interest rate hikes aimed at combating inflation.”
https://www.vox.com/money/2023/8/18/23837416/mortgage-rates-surge-housing-market-supply-soft-landing