In the last week of September, mortgage interest rates surged to their highest point in nearly 23 years, reports Freddie Mac’s Primary Mortgage Market Survey.
The 30-year fixed-rate mortgage (FRM) averaged 7.31%, up from last week when it averaged 7.19%. A year ago at this time, the 30-year FRM averaged 6.7%.
The 15-year FRM averaged 6.72%, up from last week when it averaged 6.54%. A year ago at this time, the 15-year FRM averaged 5.96%.
“The 30-year fixed-rate mortgage has hit the highest level since the year 2000,” says Sam Khater, Freddie Mac’s chief economist. “However, unlike the turn of the millennium, house prices today are rising alongside mortgage rates, primarily due to low inventory. These headwinds are causing both buyers and sellers to hold out for better circumstances.”
In fact, according to a recent Redfin report, roughly 1 in 15 (6.5%) U.S. homes for sale had a price drop during the four weeks ending Sept. 24, on average, up from 5.8% a month earlier—a sharp monthly increase compared with the same period in years past.
At the same time, the median home-sale price is up 3% year over year, and the typical monthly payment is at a record high as rates stay elevated.
“Buyers are using things like inspection negotiations and high insurance premiums to back out of deals,” says Heather Kruayai, Jacksonville Redfin premier agent. “They’re holding a lot of the cards; today’s sellers need to concede on some details to close the deal.”