Mortgage rates backed away slightly from last week’s two-decade high but remain above 7%. The 30-year fixed-rate mortgage averaged 7.18%, Freddie Mac’s latest weekly mortgage indicator shows.
“The lack of movement is discouraging to home buyers who are also facing higher home prices,” says Jessica Lautz, deputy chief economist at the National Association of REALTORS®.
Home buyers may need to re-adjust their budgets. “I do not anticipate rates lowering anytime soon, and if they do come down, it will be marginal and not enough to move the needle,” says Vickey Barron, a real estate broker with Compass in New York and author of Every Move Matters: Unlocking Value in Life and Real Estate (Forbes Books, 2023). “People will soon need to accept what interest rates are and decide for themselves if they rent or buy.”
At a rate of 7.18%, buyers would have an average monthly mortgage payment of $2,234 for an existing single-family home and $1,938 for an existing condo, Lautz says. In the West, where home prices tend to be higher, current rates are translating to an average monthly mortgage payment of $3,309 for the region’s typical existing home, Lautz says. The Midwest is the most affordable region, with a median home price of $304,600, which would make for a $1,651 monthly payment at this week’s rate.
Many real estate economists predict mortgage rates could come down in the coming weeks, depending on the Federal Reserve’s next move. However, “recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes,” says Sam Khater, Freddie Mac’s chief economist.
Lautz says that “until the Fed makes the right decision on the Fed Funds rate, buyers will continue to see higher homebuying costs. These higher rates will continue to exacerbate housing inequality and limit the number of first-time and minority buyers.”
Freddie Mac reports the following national averages for mortgage rates for the week ending Aug. 31:
- 30-year fixed-rate mortgages: averaged 7.18%, dropping from last week’s 7.23% rate. A year ago, 30-year rates averaged 5.66%.
- 15-year fixed-rate mortgages: averaged 6.55%, unchanged from last week. A year ago, 15-year rates averaged 4.98%.