The 30-year fixed mortgage interest rate has now surpassed the historical average since 1971 of 7.74%. The rate now sits at 7.79%, up from 7.63% last week. After gaining steam since September, the rate is just shy of 8%.
For a $400,000 home, a mortgage interest rate of 7.79% means a mortgage payment of $2,301. One year ago, the same $400,000 home had a rate of 7.08% and would have a monthly payment of $2,146—a savings of $155. For some households, this could easily be the cost of gas or utilities for one month. This mortgage interest rate is pricing out some first-time home buyers by reducing housing affordability, especially with the rise in home prices.
However, positive expectations are ahead. Based on NAR Research's forecast released today, the 30-year fixed rate is expected to peak in Q4 2023 and then decline—hitting 6.9% in Q2 2024. This decline in mortgage rates will be a welcome relief to home buyers, and potential sellers and consumers on the sidelines are very likely to rebound into the market at that time.