According to some leading real estate industry experts, including Realtor.com, Redfin, and Trulia, owning a home in America is going to become increasingly more difficult this year due to rising interest rates, even though there will be more homes on the market. “On the whole, it’s going to be more expensive for buyers next year, despite the fact that they’ll have more options,” said Danielle Hale, chief economist at Realtor.com.
The U.S housing market stalled in 2018 after a long period during which price increases outpaced income growth. That had been offset by historically low mortgage rates, but rates began rising steadily a year ago. While still low by historical standards, the average rate on a 30-year home loan was 4.51 percent last week, according to mortgage buyer Freddie Mac. That’s up from 3.95 percent a year earlier.
Realtor.com and Redfin forecast the rate on a 30-year, fixed-rate mortgage rising to 5.5 percent by the end of 2019. Zillow expects the rates will reach 5.8 percent. That would be the highest since the recession a decade ago. A mere extra half percentage point can boost monthly payments and add tens of thousands of dollars in interest over the life of the typical 30-year loan.
“Rising mortgage rates will take a bite out of affordability on top of an already supply- constrained and high-priced housing market,” Trulia senior economist Cheryl Young wrote in her forecast.
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