Mortgage Rates Soar

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Mortgage Rates Soar

Mortgage rates are skyrocketing and are anticipated to keep rising as the Federal Reserve gets ready to announce its most recent interest rate increase, which may be by as much as 75 basis points.

According to information gathered by The Balance, a sister site of Investopedia, the average rate offered for a conventional 30-year fixed mortgage increased to 6.51% on Tuesday and is now almost 1 percentage point more than it was two weeks ago.

According to the National Association of Realtors, rising rates are having a negative impact on the housing market as seen by the six consecutive months of declining house sales. However, according to the most recent S&P CoreLogic Case-Shiller Index report, house values have continued to reach new highs, rising over 20% in March from a year earlier. This was the report’s largest rise ever.

After May demand came in 17% below forecasts, real estate agency Redfin said it was firing around 470 staff. Compass, a real estate company, also said it was dismissing roughly 450 employees. Shares of Redfin (RDFN) are down about 80% this year, while Compass (COMP) shares are down more than 55%.

The Census Bureau will disclose statistics on new house development for May tomorrow. Housing starts are expected to decline to 1.72 million units, slightly less than in April, according to economists.

“The U.S. housing market is slowing down at the same time as homeowner equity has increased by 20% to a record high of $27.8 trillion. Although that’s excellent news for homeowners, increasing mortgage rates will make them hesitant to use the equity in their houses to pay for other products and services “Investopedia’s Editor in Chief, Caleb Silver, said.

  Understanding Different Mortgage Rates

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