Source: Fox 10 Phoenix —
LOS ANGELES – During the height of the COVID-19 pandemic, the Federal Reserve kept interest rates historically low, and this meant a home buyer could borrow money at an incredibly low rate.
Now, experts say the housing market looks completely different compared to the last two years of extraordinary performance, causing house hunters to grapple with suddenly high rates, rising home prices and a tight supply of properties on the market.
“It has completely changed,” Lawrence Yun, chief economist at the National Association of Realtors (NAR), told FOX Television Stations. “The mortgage rates have more than doubled and it’s limiting the homebuyers’ ability to take out a mortgage.”
High mortgage rates impact housing market
The feds recently announced another aggressive rate hike — the third consecutive increase of three-quarters of a percentage point and the sixth rate hike this year alone.
It’s a streak that has made mortgages and other consumer loans increasingly expensive and heightened the risk of a recession.
“Interest rates have increased at the fastest rate in four decades and they are at 20-year highs. As a result, the interest rate-sensitive sectors of the economy such as housing, autos, appliances, furniture, etc. have materially declined,” Sam Khater, vice president and chief economist of Freddie Mac’s Economic and Housing Research Division, told FOX.
The average rate on a 30-year fixed mortgage — which was just 3.14% a year ago — surpassed 7% late last month, mortgage buyer Freddie Mac reported, the first time in two decades.
According to new data released Friday by the NAR, the monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,840 – up 50% year-over-year.
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