Mortgage Rates Surge to Highest Since 2008
The rate on the 30-year fixed rate mortgage surged to 5.78% from 5.23% last week, according to Freddie Mac, marking the biggest one-week increase since 1987 and hitting the highest level since November 2008. The average rate is more than two and a half points higher since just the start of the year. Rapidly increasing mortgage rates have become the biggest hurdle homebuyers face in addition low inventory levels and double-digit price gains, pricing many out of the market altogether. The jump in mortgage rates, which track the 10-year Treasury yield, comes after the Federal Reserve increased benchmark interest rates by three-quarters of a point to help tame inflation, which is at 40-year highs. That increase was the largest since 1994 and the central bank signaled it would raise the rate by another 1.75 percentage points over the rest of the year. The median list price for a home in the U.S. was $447,000 in May, up 18% since May 2021. That means it's about 65% more expensive to finance 80% of the median priced U.S. home now than a year ago. That translates to paying an extra $820 a month, according to Realtor.com. “For every 1% rise in mortgage rates, your borrowing power drops about $50,000, approximately.