October mortgage rates will continue to rise, haunting home buyers
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While we don't face the specter of another
The
The run-up to the September meeting saw a significant jump, with 30-year fixed-rate mortgages surpassing and then staying above 6%. Arguably, this was mortgage lenders getting out in front of the Fed. An aggressive 75-basis-point increase was expected, and some had even considered a 100-basis-point hike a real possibility.
In addition to its usual announcement, the
Though mortgage interest rates aren't directly tied to the federal funds rate, increases to that rate make all types of borrowing — including getting a home loan — more expensive.
Affordability worsening even as prices start to fall
This rising rate environment is sending chills down the spines of many potential home buyers, even as home prices show signs of softening. Though year-over-year increases continue, as of August, the median existing home price has dropped for two months running, according to the
To borrow
The rising cost of borrowing is pushing down demand, as the Fed had hoped, creating slightly less competition in some markets. There's still a shortage of available homes. However, if these trends continue, we could see a housing market that favors buyers before the year ends, according to
What happened to mortgage rates in September
Mortgage rates rose each week in September. Interest rates for 30-year fixed-rate mortgages had a brush with 6% back in June, but last month they quickly went north of 6% and stayed there. Other loan types saw increases, too — interest rates on 15-year fixed-rate mortgages and 5-year adjustable-rate mortgages, for example, have been above 5%.
Our September forecast predicted that rates for fixed-rate mortgages would "remain fairly stable" for the first three weeks of the month, potentially rising following the Fed's announcement on the 21st. Instead, that rise started soon after
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