30-year mortgage rate surges to 6.28%, up from 5.5% just a week ago

Financial markets were upset this week as fears of a more aggressive rate hike from the Federal Reserve caused mortgage rates to jump.

According to Mortgage News Daily, the average rate on the 30-year fixed mortgage went up 10 basis points Tuesday. The jump Monday was 33 basis points. One week ago, the rate was close to 5%.

The housing market has turned around due to rising rates. Demand for mortgage loans has fallen. Home sales fell for six months in a row. The red-hot home prices, fueled by historically strong, pandemic-driven demand and record low supply, have not been deterred by rising rates.

The housing market is slowing.

The rate jump this week is the worst since the Fed said it would slow down its purchases of bonds in July of last year.

Matthew Graham wrote that the Fed had decided it was time to finally begin unraveling some of the easy policies put into place after the crisis. The Fed is worried about inflation.

The Federal Reserve poured money into mortgage-backed bonds, which led to record low mortgage rates. It is expected to start selling its holdings soon.

The rise in rates began in January with the average rate starting the year at around 3% and going up each month. In May there was a brief reprieve.

Home affordability has been adversely affected by higher home prices and rates.

The monthly mortgage payment on a $400,000 home with a 20% down payment went from $1,399 at the start of January to $1,976 today. Property taxes are not included.

The home is 20% more expensive than it was a year ago.