Typical mortgage payment has soared $337 in just six weeks as interest rates almost hit 7%

The average US homeowner saw their monthly mortgage payment rise by 15 percent or $337, according to a shocking new report from Redfin. 

The report goes on to say that the rising mortgage rates of around seven percent are the highest since July 2007 shortly before crash that triggered the great recession. 

This is causing potential homebuyers to get cold feet and decide not to buy in the current market. 

In addition, homes are remaining on the market for longer which is resulting in owners dropping prices at the highest level since 2015.  

Not since January have pending sales been at the current low level while the amount of homes selling for below market rates is at its highest level since 2020. While new listings are down 14 percent from the same time in 2021. 

Redfin’s Jason Aleem is quoted in the report as saying: ‘It’s imperative for home sellers to react quickly and aggressively as the market turns.’

He continued: ‘This means adjusting your pricing immediately if you want to be competitive and attract offers from a smaller pool of qualified homebuyers. If your home isn’t the ‘belle of the ball’ in your neighborhood, you’re going to need to cut the price to sell it.’

According to the Redfin report, the rising mortgage rates of around seven percent are the highest since July 2007 shortly before crash that triggered the great recession

According to the Redfin report, the rising mortgage rates of around seven percent are the highest since July 2007 shortly before crash that triggered the great recession

One of Redfin's key indicators of downturn in potential buyers is the fact that 'homes for sale' as a search term on Google was down 33 percent this September compared against the same time last year

One of Redfin’s key indicators of downturn in potential buyers is the fact that ‘homes for sale’ as a search term on Google was down 33 percent this September compared against the same time last year

New listings of homes are down 14 percent from a year earlier

New listings of homes are down 14 percent from a year earlier

One of Redfin’s key indicators of downturn in potential buyers is the fact that ‘homes for sale’ as a search term on Google was down 33 percent this September compared against the same time last year. 

Other factors, such as home tour requests are down alongside mortgage purchase applications. 

At the time of writing, the average home price in the United States is $369,250, which is up seven percent year over year. 

The sale prices in crime-ridden San Francisco are down four percent while they are down 11 percent in New Orleans.  

Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate climbed to 6.70 percent from 6.29 percent last week. By contrast, the rate stood at 3.01 percent a year ago.

The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, jumped to 5.96 percent from 5.44 percent last week.

Rapidly rising mortgage rates threaten to sideline even more homebuyers after more than doubling in 2022. Last year, prospective homebuyers were looking at rates well below 3 percent.

Freddie Mac noted that for a typical mortgage amount, a borrower who locked in at the higher end of the range of weekly rates over the past year would pay several hundred dollars more than a borrower who locked in at the lower end of the range.

Seattle¿s housing market is slowing faster than any in the country, a new study has revealed - as cash-strapped buyers increasingly shy away from home purchases

Seattle’s housing market is slowing faster than any in the country, a new study has revealed – as cash-strapped buyers increasingly shy away from home purchases

Last week, the Federal Reserve bumped its benchmark borrowing rate by another three-quarters of a point in an effort to constrain the economy, its fifth increase this year and third consecutive 0.75 percentage point increase.

Perhaps nowhere else is the effect of the Fed’s action more apparent than the housing sector. Existing home sales have been in decline for seven straight months as the rising cost to borrow money puts homes out of reach for more people.

The government reported Thursday that the U.S. economy, battered by surging consumer prices and rising interest rates, shrank at a 0.6% annual rate from April through June. That was unchanged from the previous estimate for the second quarter.

Fed officials forecast that they will further raise their benchmark rate to roughly 4.4% by year’s end, a full point higher than they envisioned as recently as June. And they expect to raise the rate again next year, to about 4.6%. That would be the highest level since 2007.

By raising borrowing rates, the Fed makes it costlier to take out a mortgage and an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation.

Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. That’s influenced by a variety of factors, including investors’ expectations for future inflation and global demand for U.S. Treasury’s.

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