Mortgage rates have surged higher this week as markets digest more aggressive interest rate hikes from the Federal Reserve and with the average 30-year fixed mortgage rate hitting its highest level since 2008 experts warn that warning signs in the housing market could spell trouble for the broader economy
Markets are bracing for a more aggressive monetary policy from the Fed.
The average interest rate on the popular 30-year fixed mortgage home loan is now over 6 percent, its highest level since the 2008 financial crisis and up from around 5 percent a week ago.
The median monthly payment on a new 30-year mortgage has gone up more than 50% since last year as rising interest rates and recession fears have caused existing home sales and mortgage applications to fall.
James Stack, president of InvesTech Research, predicts that the housing bubble could put a torpedo into the U.S. economy.
The new data from the National Association of Home Builders showed that homebuilders' confidence fell to its lowest level in two years as rising inflation and high mortgage rates caused buyers to leave the market.
NAHB Chairman Jerry Konter said that new buyers were hard-hit by the decline in housing affordability.
Home purchase applications are down 15% from last year due to record-low housing stock, rising prices and the run up in interest rates, according to data from the Mortgage Bankers Association.
According to Ruben Gonzalez, chief economist at Keller Williams, existing home sales are likely to fall over the next several months. He predicts that mortgage rates will respond to changes in expectations around the Fed's policy path.
Home buying has become more expensive due to the Federal Reserve raising interest rates in order to combat inflation. Mark Zandi, Moody's chief economist, says that the current red-hot housing market will cool off. Goldman strategists say that additional increases in mortgage rates will amplify downside risk for the housing market and could have significant implications for the rest of the economy.
There is a reason why prices will still rise.
Home buying is becoming too expensive for most Americans, according to experts.
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