Bianca Facchinei
What are rising mortgage rates doing to the housing market?
There have been small dips along the way, but there has been more than a 1.5% increase in just the last seven months.
LEARN MOREPosted: 4:47 p.m. EST Nov 9, 2023
For most potential buyers, finding an affordable home has become an aberration. So some people are getting creative.
Caleb Shore and Gabe Farmer, who are both married, bought a house together in Ohio that they share with their wives.
It's their way of getting around high prices that otherwise feel out of reach. Part of the problem is mortgage rates.
According to Fannie Mae, the national average for a 30-year fixed-rate mortgage fell to 7.5% Thursday. That's down from 7.76% a week before, but still too close to 8%.
That, coupled with today's home prices, has created a serious dilemma. Buyers and sellers can look for relief when mortgage rates drop.
"I think that the number, the magic number to see things move is when it gets to about 5.5%-6%, around there and ... I don't see that for the rest of this year. Maybe in '24, sometime in the middle of '24," said Dottie Herman, vice chair and former CEO of Douglas Elliman Real Estate.
The principal and interest payment on a mortgage needed to buy a median-priced home excluding taxes, insurance and other fees surpassed $2,500 in October, according to Intercontinental Exchange (ICE). That's the highest since 1975, which is when ICE started tracking this data.
And, that figure — up $140 from the previous month — now represents 41% of Americans' median monthly income.
That's a big jump from the old average of just under 25%. Prices may be cooling in most markets, but a significant drop isn't exceeded anytime soon. If you're looking to buy now, you can still shop around for the best mortgage lender.
"You want to put in an application with as many as three different lenders and do so as close to the same period of time as possible. You want to do all those on the same day. That way you get a real apples-to-apples comparison, not just on the rate that's available, but also the fees that the lender is charging," said Greg McBride, a chief analyst at Bankrate.
