Average U.S. monthly mortgage rates are on the rise, with payments on homes jumping $50 over the last six weeks, according to a new report from Redfin.
In recent weeks, the benchmark 30-year loan surpassed 3% for the first time since June, according to the real estate brokerage.
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As of Oct. 7, the rate for a 30-year loan is 2.99% while the rate for a 15-year loan, a popular option for homeowners refinancing their mortgages, is sitting at about 2.33%, according to mortgage buyer Freddie Mac.
“For now, mortgage rates are still hovering near 3% and demand remains strong,” according to Redfin Chief Economist Daryl Fairweather.
Realtor.com manager of economic research George Ratiu cautioned that mortgage rates are on “an upward trajectory” and it’s already impacting first-time homebuyers’ budgets.
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“At today’s rate, a homebuyer looking at a median-priced home will spend $134 more per month on their mortgage payment, adding over $1,600 a year to their payments,” he said.
For now, however, homes are still selling very quickly, with nearly half finding a buyer within a two-week span, according to Redfin. In fact, homes are also still selling above their asking price.
During the four-week period ending on Oct. 3, the asking prices on newly listed homes hit a new record, increasing 12% year over year to a median of $365,073, Redfin reported. Asking prices rose throughout the entire month of September, which Redfin noted is a “typical late-summer seasonal uptick.”
Due to housing cost increases, Ratiu projects that the pace of U.S. home sales will moderate for the last stretch of the year.
MORTGAGE PAYMENTS ARE GETTING MORE AND MORE UNAFFORDABLE
Fairweather is in agreement.
“We are likely to see rates tick up into the winter months, and that could slow demand just like it did in late 2018,” Fairweather said. “As that happens, sellers will have a harder time getting buyers to bite on their sky-high asking prices.”
Redfin noted that there is already an increasing share of listings whose prices have dropped, bolstering the notion that hat price increases may be easing just slightly.
The Associated Press contributed to this report.