In This Article:
Mortgage rates dropped once more last week as the Fed opted to skip a hike to the federal funds rate — and more relief could be on the way.
Don't miss
-
You could be the landlord of Walmart, Whole Foods and CVS (and collect fat grocery store-anchored income on a quarterly basis)
-
Here's how much money the average middle-class American household makes — how do you stack up?
-
Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here's how
“As inflation continues to decelerate, economic growth is slowing and the tightening cycle of monetary policy is reaching its apex, which means mortgage rates are expected to decrease later this year and into next,” says Sam Khater, chief economist at housing giant Freddie Mac.
Even so, today's rates — considerably higher than they were a couple years ago — are keeping both buyers and sellers at bay.
Say you’re buying a $500,000 home. Assuming you have a 10% down payment and lock in a 30-year fixed mortgage at today’s average rate of 6.69%, you’d have to pay about $3,460 a month after property taxes and home insurance, according to estimates from Zillow.
Considering that most lenders want you to keep your housing expenses at or under 30% of your gross income, you’d need to earn at least $138,000 per year to afford that $500,000 home.
30-year fixed-rate mortgages
The average 30-year fixed rate fell to 6.69% last week, while the week before it averaged 6.71%. A year ago at this time, the rate averaged 5.78%.
“Mortgage rates have been on the high end of the 6-7% range since the beginning of June, and home prices have made their typical seasonal ascent, though less aggressively than in summers past,” writes Hannah Jones, economic research analyst at Realtor.com.
But Jones notes home prices aren’t expected to hit a new peak this summer, as has been the case in previous years. The national median listing price fell year-over-year earlier this month for the first time since 2016.
“Despite this annual price decline, homes in many areas are out of the feasible price range for many buyers and still-high interest rates are discouraging homeowners from giving up their current mortgage rate and listing their homes for sale,” Jones adds.
15-year fixed-rate mortgages
The average rate on a 15-year home loan, on the other hand, inched up from 6.07% to 6.10% last week. This time a year ago, the 15-year fixed-rate averaged just 4.81%.
Nadia Evangelou, senior economist at the National Association of Realtors (NAR), believes inflation “may ease even faster in the following months.”