Mortgage rates jump past 5%, signaling more home price cuts ahead

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  • The average rate on the 30-year fixed sat just below 4 percent a year ago, after dropping below 3.5 percent in 2016. It just crossed the 5 percent mark, according to Mortgage News Daily.
  • While more people think now is a good time to buy a home, according to a monthly sentiment survey from Fannie Mae, more people also think mortgage rates will go up.
  • Higher rates could throw cold water on those high home prices, as sellers see demand fall off and their houses sit on the market longer.

Millennials are in their prime homebuying years, and they’re used to cheap credit. So they might be in for a rude awakening as mortgage rates jump.

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The average rate on the 30-year fixed loan sat just below 4 percent a year ago, after dropping below 3.5 percent in 2016. It just crossed the 5 percent mark, according to Mortgage News Daily. That is the first time in eight years, and it is poised to move higher. Five percent may still be historically cheap, but higher rates, combined with other challenges facing today’s housing market could cause potential buyers to pull back.

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“Five percent is definitely an emotional level inasmuch as it scares prospective buyers about how high rates may continue to go,” said Matthew Graham, chief operating officer of MND.

While more people think now is a good time to buy a home, according to a monthly sentiment survey from Fannie Mae, more people also think mortgage rates will go up, and more people are concerned about keeping their jobs and growing their incomes.

www.cnbc.com/2018/10/09/mortgage-rates-jump-past-5percent-signaling-more-home-price-cuts-ahead.html

Loan originations down 40% due to no more refinancing.

AC

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