Fewer people are buying homes, a sign that home buyers are being squeezed out of the market due to soaring mortgage rates, which averaged 5% this week for 30-year fixed-rate mortgages.
The fixed-rate mortgage rate jumped 0.28% in the past week alone, hitting a high not seen since February 2011, according to government mortgage company Freddie Mac. A year ago, the 30-year rate average of 3.04%which is almost 2% lower than the current rate.
This 2% difference can add hundreds of dollars to the monthly cost of financing a home, making it unaffordable for some potential buyers.
For a house worth $408,100 — the median house price in the United States — with a 20% down payment, a 30-year fixed mortgage and an interest rate of 5%, monthly mortgage fees would amount to $1,752.62, according to CNBC’s calculations.
But for the same home bought last year, when interest rates were 3.04%, monthly mortgage payments would be just $1,383.51, according to CNBC’s calculations. That’s nearly $400 less per month and over $4,400 less per year.
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There are signs that the market is cooling down somewhat
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