House for sale

MONEY & BUSINESS: Mortgage rates fall as recession fears rattle housing market: Freddie Mac

Website 👉 https://has2see.com/
Telegram 👉 https://t.me/has2see_channel

Mortgage rates declined this week, continuing a volatile streak as the market digests the onset of an economic recession that will have implications for the US housing sector.

A 30-year fixed-rate mortgage averaged 5.30% through Thursday, according to the latest data from Freddie Mac. The rate dipped from the previous week, when it sat at an average of 5.54%, but is still significantly higher than its level of 2.80% at the same time last year.

“Purchase demand continues to tumble as the cumulative impact of higher rates, elevated home prices, increased recession risk and declining consumer confidence take a toll on homebuyers,” said Sam Khater, chief economist at Freddie Mac.

“It’s clear that over the past two years, the combination of the pandemic, record low mortgage rates and the opportunity to work remotely spurred greater demand,” Khater added. “Now, as the market adjusts to a higher rate environment, we are seeing a period of deflated sales activity until the market normalizes.”

Mortgage rates have surged since January as the Federal Reserve implements a series of interest rate hikes to combat decades-high inflation. The Fed continued its effort on Wednesday with its second straight hike of three-quarters of a percentage point.

Fed Chair Jerome Powell referenced signs of a cooling US housing market after the Fed unveiled its latest larger-than-normal interest rate hike.

“Recent indicators of spending and production have softened,” Powell said. “Growth in consumer spending has slowed significantly, in part reflecting lower real disposable income and tighter financial conditions. Activity in the housing sector has weakened, in part reflecting higher mortgage rates.”

Powell indicated that further rate hikes are likely to be implemented in the months ahead.

Some economists have warned of likely price declines for home owners.
Getty Images

Meanwhile, fears of a recession mounted on Thursday after the GDP posted its second consecutive quarterly decline. A recession is widely defined as two straight quarters of economic contraction.

The Fed’s rate hikes do not have a direct impact on mortgage rates. However, the tightened monetary policy tends to result in steeper mortgage rates as the cost of borrowing becomes more expensive and investors seek refuge in bonds.

The 15-year fixed-rate mortgage averaged 4.58% for the week, down from 4.75% the previous week.

Person signing mortgage
Investors are increasingly fearful of a recession.
Getty Images

As The Post has reported, economists have increasingly noted signs of softness in the housing sector as the impacts of inflation, steep home prices and higher mortgage rates. Demand for mortgage applications recently fell to a 22-year low.

Earlier this week, economist Ian Shepherdson of Pantheon Macroeconomics warned that home prices were set to decline “substantially” due to “cratering” demand among prospective home buyers.



Source link


PGlmcmFtZSB3aWR0aD0iNjQwIiBoZWlnaHQ9IjM2MCIgc2Nyb2xsaW5nPSJubyIgZnJhbWVib3JkZXI9IjAiIHN0eWxlPSJib3JkZXI6IG5vbmU7IiBzcmM9Imh0dHBzOi8vd3d3LmJpdGNodXRlLmNvbS9lbWJlZC9CWDhmdW1VR2pRTUQvIj48L2lmcmFtZT4=
THIS IS IT!!!

PGlmcmFtZSB3aWR0aD0iNjQwIiBoZWlnaHQ9IjM2MCIgc2Nyb2xsaW5nPSJubyIgZnJhbWVib3JkZXI9IjAiIHN0eWxlPSJib3JkZXI6IG5vbmU7IiBzcmM9Imh0dHBzOi8vd3d3LmJpdGNodXRlLmNvbS9lbWJlZC9aZ1VnbDRvZHkyeUIvIj48L2lmcmFtZT4=
WATCH THIS!

PGlmcmFtZSB3aWR0aD0iNjQwIiBoZWlnaHQ9IjM2MCIgc2Nyb2xsaW5nPSJubyIgZnJhbWVib3JkZXI9IjAiIHN0eWxlPSJib3JkZXI6IG5vbmU7IiBzcmM9Imh0dHBzOi8vd3d3LmJpdGNodXRlLmNvbS9lbWJlZC8ydEZzdEJzNjFQRTUvIj48L2lmcmFtZT4=
IMPORTANT!

Want The Real News
and join millions of other active users
×
Show
×
Show