Other indices showed significantly higher mortgage rates this week.
HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 7.43% on Wednesday, compared to 7.22% the previous week. At Mortgage News Daily on Wednesday, the 30-year fixed rate for conventional loans was 7.65%, up from 7.33% the previous week.
“With the explosion of the bond market, the strength of the U.S. dollar, the positive jobless claim data combined with the Fed’s hawkish tone, 10-year yields just shot up and mortgage rates followed,” HousingWire’s Logan Mohtashami said.
On Thursday, the 10-year yield reached 4.61%, the highest level since 2007.
Home sales transactions will decline this fall
In August, sales of existing homes and new homes were down, as were pending home sales, which suggests conditions will remain slow for the next quarter. Additionally, new home prices also declined, signaling that August may be the beginning of the end of this resilient housing market, according to Bright MLS Chief Economist Lisa Sturtevant.
“For many would-be homebuyers, a mortgage rate above 7% simply means that the numbers do not work for them,” Sturtevant said in a statement. “The 7% threshold, above which mortgage rates have been now for seven weeks, according to Freddie Mac, is a psychological, as well as a financial, barrier for consumers. Consumer confidence has started to stumble as individuals and households are becoming more anxious about the economy.”
Consumers are growing more cautious amid rising economic uncertainty, Sturtevant added.
Meanwhile, sellers are also refraining from listing their homes, adding pressure to an already depleted housing inventory. The absence of uptick in homes listed also means that there might not be any major price drops in the foreseeable future.
“Rates over 7% and low for-sale inventory continue to create affordability challenges for prospective buyers, Mortgage Bankers Association President and CEO Bob Broeksmit said in a statement. “Until rates start to come back down, we anticipate housing market activity will remain slow.”
Source: housingwire.com