Source: Fortune —
Housing economists are clear: The swift move up in mortgage rates amounts to an economic shock.
The bad news for homebuyers? That already big economic shock got even bigger last week. On Thursday, Freddie Mac reported that the average 30-year fixed mortgage rate hit 4.67%. Just one week earlier the rate was at 4.42%. Meanwhile, back in December it was 3.11%.
Soaring mortgage rates, of course, are an immediate hurdle to the demand side of the market. Rising mortgage rates mean some borrowers—who must meet lenders’ strict debt-to-income ratios—will lose their mortgage eligibility. Borrowers, who do maintain their mortgage eligibility, could still be deterred by the additional cost it adds to their payment. A borrower who took on a $500,000 mortgage at a 3.11% rate would get a monthly mortgage payment of $2,138. While at a 4.67% rate, that monthly payment soars to $2,584. Over the course of the 30-year loan, that’s an additional $160,698.
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