“Homeownership Out of Reach? Prices Soar as Mortgage Rates Hit New Highs

Homebuyers are feeling increasingly locked out in a hot housing market as prices continue to soar and mortgage interest rates reach unprecedented levels. A recent report from the National Association of Realtors (NAR) showed that existing home sales fell by 4.4% between August and September, the largest drop in nearly six years. This decline comes as more buyers are feeling the impact of sky high prices and unfriendly lenders. The average mortgage rate for a 30-year fixed loan was 3.78% in August, but jumped to 4.72% in September – the highest it has been in 7 years. This increase in mortgage interest rates has made it more difficult for potential homebuyers to qualify for a loan and to afford a house. The NAR report also revealed that as of September 2018, the average existing home price was 4.7% higher than the same time last year. This means that not only are mortgage rates higher, but buyers are also paying more for a home than ever before. In order to buy a home in this climate, potential buyers would need to come up with more money up front and have a higher credit score. This is a huge burden for first-time buyers, who lack the resources and credit to be competitive in this market. And, with higher prices and higher rates, buyers may end up having to pay a higher monthly mortgage payment than what they expected, which could prevent them from being able to afford a home at all. The reality is that with prices soaring and mortgage rates reaching new highs, homebuyers are feeling that they are locked out of the market or unable to compete with other buyers. As a result, existing home sales are declining and potential buyers are taking a step back to assess what they can afford in such an unpredictable market.