After sliding down over the summer, mortgage rates have climbed, reaching the highest point since 2008 and creeping closer to 6%.
A 30-year fixed mortgage now has a rate of 5.89%, up from rates last week that were at 5.66%.
Rates are 2.5 percentage points higher than at the beginning of the year and in the last three weeks, rates have risen nearly three-quarters of a point.
A 2.5-percentage-point increase brings the monthly payment of a $300,000, 30-year, 3% fixed mortgage from $1,265 to $1,710.
The shocking interest rates have caused some buyers to take themselves out of the running, waiting until later to buy. Those still hunting are more picky with their purchase, causing sellers to take a second look at their pricing.
Why it’s news
The higher monthly payment resulting from higher mortgage rates means purchasing activity is falling—down 23% from the same time last year. As fewer people are able to buy a home, the demand for mortgages stays at a 22-year low, according to Yahoo! Finance.
Some home buyers are just biding their time anticipating a price drop. In June, the median home price was at a record high of $450,000. As of August, the median home price is at $435,000, according to Realtor.com.
Sellers are cutting prices in an effort to attract buyers. In August, 19.4% of listed homes had a price reduction, 11% more than last year.
Housing prices have started to drop, but the prices still remain 39.6% higher than August 2019. Even if buyers are able to cope with the higher listing price, the high mortgage rates put typical home payments at around $2,000 a month, 61% higher than last year, Yahoo! Finance reports.
While buyers are scared off by high mortgage rates, sellers are discouraged by the drop in prices. Newly listed homes have dropped by 13.4% year over year.