In a seven-week consecutive surge, U.S. mortgage rates have reached an average of 7.79% for a 30-year fixed loan, according to Freddie Mac. The increase coincides with a rise in 10-year Treasury yields, which have surpassed 5%, marking a 16-year high.
The surge has resulted in discouraging potential homebuyers, leading to a shortage of resale listings and driving purchase loan applications to their lowest point since 1995. Despite this downturn, the National Association of Realtors reported an unexpected increase in contracts for previously owned homes in September.
Builders have responded to these market conditions by offering discounted mortgage rates, propelling new home purchases to their fastest pace since early 2022. However, as some borrowers are already facing rates above 8% and with the Federal Reserve committed to its contractionary policy, significant relief appears distant
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