US mortgage rates climb to 5.54% as housing demand softens
US mortgage rates inched higher, increasing the pressure on the housing market and adding to the affordability crisis.
The average for a 30-year loan rose to 5.54 per cent from 5.51 per cent last week, Freddie Mac said on Thursday (Jul 21) in a statement.
This year’s climb in mortgage rates, coupled with increasing economic uncertainty, has begun to sideline some potential homebuyers, slowing markets across the US from the once-frenzied pace of the past 2 years. Applications for mortgages fell to the lowest level in more than 2 decades for the week ended Jul 15.
“Consumer concerns about rising rates, inflation and a potential recession are manifesting in softening demand,” said Sam Khater, Freddie Mac’s chief economist. “As a result of these factors, we expect house price appreciation to moderate noticeably.”
The slowdown has hit sales particularly hard, with a measure of deals for previously owned US homes dropping to a 2-year low in June, data from the National Association of Realtors showed on Wednesday. The pull-back has also started to weigh on homebuilders including DR Horton, which reported weaker-than-expected quarterly orders on Thursday.
Prices are starting to ease from record-breaking highs in June, but are still relatively elevated, according to a report from real estate brokerage Redfin. That is squeezing buyers, forcing consumers to enter a competitive rental market.
“For housing, steep price gains coupled with higher mortgage rates have created an affordability ceiling,” said George Ratiu, manager of economic research at Realtor.com. “Many Americans are finding they no longer have enough money to purchase a home that meets their needs.” BLOOMBERG
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