- The U.S. housing market has been relying on low mortgage rates for growth.
- Freddie Mac reveals that mortgage rates have been ticking up.
- Higher mortgage rates could price more buyers out of the market.
The U.S. housing market has been propelled higher by a low 30-year fixed-rate mortgage, but it looks like that party could be over. The latest data from mortgage specialist Freddie Mac reveals that the 30-year fixed-rate mortgage jumped last week to 3.75% from 3.69% the preceding week.
The rate on the 15-year mortgage also jumped to 3.2% last week from 3.13% in the preceding one. Both rates have been rising in recent weeks.
Freddie Mac chief economist Sam Khater opines that an improved economic outlook and an increase in purchase mortgage applications are healthy signs for the U.S. housing market. However, he seems to be ignoring the obvious red flags that an increase in mortgage rates could trigger in the future.
Higher rates will worsen the recent U.S. housing market downturn
Believe it or not, the U.S. housing market has started showing signs of weakness over the past couple of months. Sales of new homes dipped in September and prices fell despite a tight inventory situation. Existing homes sales also took a beating, declining much more than what analysts were expecting.
Analysts believe that high home prices and tight inventories are to blame for the September downturn. And what’s alarming is that the situation might not improve in the near-term after September…