Mortgage rates reach highest since 2008

The highest level of interest for the 30 year mortgage since October 2008 was reached this week, according to experts.

The average rate for a 30 year fixed-rate mortgage went to 6.29% for the week ending Sept. 22, up from when it averaged 6.02% and is significantly higher than last year when it was 2.88%.

Other loan terms were also increased this week. The 15 year mortgage rose to 5.44%, up from 5.21% last week and up from 2.15% last year. The five-year Treasury-indexed hybrid mortgage ARM increased to 4.97%, up from 4.93% last week and up from 2.43% last year.

Sam Khater, the chief economist of Freddie Mac, said rising mortgage rates have led to a drop in home prices, but supply is still an obstacle to homebuyer affordability.

The house prices are softening, and home sales have decreased, as a result of higher rates, according to Khater. Despite this decrease in sales, the number of homes for sale remains well below normal levels. If you're ready to shop around for a mortgage loan, you can use the Credible marketplace to compare interest rates from multiple mortgage lenders in minutes.

Lawrence Yun, the National Association of Realtors NAR chief economist, said in a statement that housing inventory will likely remain constrained for the rest of the year.

Yun said that the low existing-home supply increased the need for new-home construction.

The latest said that builders' confidence worsened for the ninth consecutive month, with sentiment falling to 46 in September after 49 in August. Anything below 50 is considered poor. Robert Dietz, NAHB's chief economist, said that the builder sentiment has declined every month in 2022. The housing recession shows no signs of abating as builders grapple with elevated construction costs and aggressive monetary policy from the Federal Reserve that helped push mortgage rates above 6% last week, the highest level since 2008. Home prices are softening but affordability is still an issue.

According to Realtor.com, homebuyer appetite has been dampened by higher mortgage rates, which has resulted in a drop in existing home sales for seven consecutive months. August home sale prices were down 6% from their June peak.

Home prices are still up 14.1% from a year ago and up 43.8% since August 2019, meaning that affordability remains an issue for homebuyers, according to George Raitu, Realtor.com's senior economist. That would add to the homebuyer's financing burden by more than $10,000.

Raitu said today's housing market is highly unaffordable for buyers watching their take-home pay shrink due to higher prices, and shopping budgets diminish due to rising rates. Price cuts may be the only viable option to restore housing balance and affordability in many places. If you want to get a mortgage or get a mortgage refinance, use Credible to compare lenders and find the best rate.

You can email The Credible Money Expert at moneyexpert credible.com and ask a question that could be answered by Credible in our Money Expert column.