Just Like That, 30-Year Mortgage Leaps To 6.19%

Number of the Day: The most relevant or interesting figure in personal finance

11

That’s how few days it took for the average 30-year mortgage rate to leap more than a full percentage point to 6.19% from 5.11%, showing how quickly home affordability is eroding.

The average rate offered for a 30-year mortgage jumped to 6.19% from 5.61% in just one business day Monday, according to lender data provided to The Balance. It’s gone up more than two percentage points since March 1, when the rate was just 4.16%, and it’s a world away from the winter of 2020-2021, when the rate got as low as 2.89%. The Balance’s detailed mortgage data only goes back to last April, with data on record highs and lows stretching back to 2020. As measured by Freddie Mac, though, mortgage rates reached their highest point since 2011 last week. 


These increases have made it much tougher to afford buying a house. In fact, the monthly cost in principal and interest payments alone is up well over $500 compared to when Freddie Mac and the Mortgage Bankers Association say rates were at rock bottom a little over a year ago. Today, the monthly payment for a mortgage on the typical home would be $1,749, compared to $1,391 at the beginning of March and $1,188 if you’d been able to get the same loan at the record-low rates that prevailed in the winter of 2020-2021.

(That’s assuming  a median-priced home—$357,300 as of February, according to the National Association of Realtors—with a 20% down-payment, and not counting things like insurance and property taxes. And it doesn’t even factor in how much home prices have continued rising lately.)

The reason for the steep mortgage rate increases? The Federal Reserve’s battle against inflation. Rates tend to move in the same direction as yields on 10-year treasuries, and those have surged as the Federal Reserve has raised its benchmark interest rate in an effort to slow down spending to tame today’s out-of-control price increases.

The rapid rise in mortgage rates has already shaken up the housing market. In April, an index measuring how easy it is to sell newly built homes declined to its lowest level in seven months, the National Association of Home Builders trade group and Wells Fargo said Monday. The decline was partly due to those rising rates, economists at PNC said.

However, some experts think that plenty of people will still want to buy houses—even in the face of rising costs—and that some buyers might be rushing to close deals before rates increase even more.  

“The Federal Reserve’s actions to address inflationary pressure are certainly impacting mortgage rates, which undoubtedly will affect the housing market,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “Demand for housing continues to remain solid, propelled by the large swath of first-time homebuyers and prospective purchasers looking to lock in a mortgage rate before they increase further.”

Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.

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Article Sources

  1. Freddie Mac. “Mortgage Rates Hit Five Percent.”

  2. National Association of Realtors. “Existing Home Sales.”

  3. Freddie Mac. “Freddie Mac Releases Quarterly Forecast.”