Mortgage interest rates eased this week from 7.18% to 7.12%. However, this is the fourth week above 7%. For home buyers, this means a mortgage payment for a typical single-family existing home of $2,221 and an existing condo of $1,926. While this is a two-week decline in rates, the mortgage payment for a $400,000 home purchased today vs. last year is $259 more per month. Rates a year ago were 5.89%. Also notable is that 35% of homes are going for more than the asking price due to low inventory, with the typical seller receiving three offers. Demand is still active in the housing market despite higher rates.
The impact on home buyers is clear, but the impact on homeowners and potential sellers is also evident. Sellers are more reluctant to move even if their home no longer works for them due to a family or job change. For homeowners, this means reticence to take out a home equity loan. Home equity loans could be especially helpful for those in cramped spaces needing to remodel and to help an adult child with college costs this Fall. One hopes the Fed recognizes the ease in inflation and the job market at the desired sweet spot and stops raising the Fed Funds rate.