There is bad news for anyone looking to buy a home in the near future. The Mortgage Bankers Association (MBA) recently reported that mortgage rates in America surged to their highest level since late 2000 last week.
The 30-year fixed mortgage rate increased 15 basis points to 7.31 percent in the week ended Aug. 18. As a result, this sent a key measure of demand down to the lowest level in nearly three decades. The overall gauge of mortgage applications, which also includes refinancing, went down to 184.8, near the lowest level since 1996.
“Applications for home purchase mortgages dropped to their lowest level since April 1995, as homebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power,” said Joel Kan, MBA’s vice president and deputy chief economist. “Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing.”
According to ZeroHedge‘s Tyler Durden, the reason for the collapse is simple. The average monthly mortgage payment has exploded to a record $2,322 per month — more than double from pre-pandemic levels. This is considering housing affordability at or near the lowest on record with the average monthly mortgage payment being based on a median home price and an average 30-year fixed-rate mortgage, and assuming a 20 percent down payment.
And this is not the end of the line. According to Mortgage News Daily, borrowing costs have continued to soar this week, with the 30-year fixed rate hitting almost 7.5 percent on Tuesday.
Please think about donating below.