Haunted by high prices and low inventory, the U.S. housing market can sometimes feel like a horror movie to prospective home buyers. Now there are fears that one villain is back from the dead: the 7% mortgage rate.
30-year is already past 7%, according to some sources Mortgage lenders set their rates based on a number of factors, which include the borrower’s credit score, their loan-to-value ratio and other market factors. And that causes considerable variation: The 30-year mortgage rose to 7.14% as of Friday afternoon, according to one survey by Mortgage News Daily.
“That’s an uncertainty in the market. But they’re also ignoring the fact that consumer spending came out very weak and a couple of other macro indicators came out weaker,” he added. Retail sales fell to a 10-month low in January, and credit-card and auto-loan delinquencies are at the highest point in more than a decade. Consumer credit growth has slowed significantly.
Strong economic data which has exceeded what the market was expecting has in turn “caused market uncertainty regarding the probability the Fed will begin easing rates early this year,” he added. And let’s not forget about a potential government shutdown in March, he added, “and the disruption in government bond payments could also be at play.”
In 2023, home sales hit a 29-year-low amid historic unaffordability. There were few homes for sale on the market, and buyers were dealing with 8% mortgage rates. The typical home in the U.S. was around $402,300, according to Redfin.“A lot of my customers are paying close attention to what the Federal Reserve says,” Hal Bennett, a Bellevue, Wash.-based real-estate agent with Redfin Premier, said in a statement.