As the nation continues to experience one of the more stubborn bouts of inflation in recent memory, the Federal Reserve last week ordered the largest interest rate increase in more than 20 years. The hope is that by making it more expensive to borrow, demand will cool off.
The day after the Fed’s announcement, lender Freddie Mac released the Primary Mortgage Markey Survey (PMMS). According to that data, the average 30-year fixed-rate mortgage increased to 5.27 percent, compared to 2.96 percent just one year ago. The 15-year fixed-rate mortgage increased 4.52 percent, almost double the rate from 2021.
Lawrence Yun, Chief Economist for the National Association of REALTORS, explains, “Mortgages now compared to just a few months ago are costing more money for home buyers. Fore a median-priced home, the price difference is $300 to $400 more per month, which is a hefty toll for a working family.”
For potential buyers, the interest rate hike has a silver lining. While a new mortgage might require altering a family’s housing budget, it will also thin out the competition, as some buyers wait for more affordable housing to come on the market. Additionally, inventory is beginning to come back on the market throughout the country, evidenced by a 3 percent increase in the number of new listings on Realtor.com in the last week of April.