The uncertainty and volatility in financial markets is heavily impacting mortgage rates. The average rate on a 30-year fixed-rate mortgage reached 6.7 percent, according to a survey released today by Freddie Mac. This has more than doubled over the last year and is the highest since July 2007. A year ago rates were 3.01 percent.
For a borrower today for the typical mortgage amount this means you can expected to pay several hundred dollars more than a buyer who locked-in at the lower end of the range. For instance, a borrower who bought a $500,000 house with a 20 percent down payment a year ago could expect to pay some $208,000 in interest over 30 years, according to Bankrate.com’s mortgage calculator. Today that buyer could expect to pay some $529,000 in interest. In its statement Freddie Mac noted that for homebuyers it now has become more important to shop around with different lenders.
The rise in interest rates follows a series of interest-rate increases from the Federal Reserve in an attempt to try to cool the highest inflation in decades, according to the Wall Street Journal. Officials have indicated further increases are likely in the months ahead. The higher rates have also made refinancing unattractive. Refinancing applications are down nearly 85 percent from a year ago.