Average mortgage rates more than double from year ago
Roseville, Calif.- During this past week, the Federal Reserve raised its short-term interest rate by three-quarters of a percent. Although mortgage rates are not directly tied to the fed funds rate, the average 30-year fixed rate increased to the highest rate in 14 years.
This rate increase by the Fed is the fifth time this year they have taken action to curb inflation and has impacted mortgage rates. According to Freddie Mac the national average is 6.29 percent for a 30-year fixed rate loan which is more than double what the rates were a year ago.
The rapid increase in mortgage rates is slowing housing sales and demand. It is also slowing home price appreciation. Home sales were down by almost 20 percent in August compared to a year earlier, which is a direct result of increased mortgage rates.
Currently, we have several listings. One of the most common things we hear from potential buyers is that even though we want a new house, we can't afford to walk away from our low-interest rate loan.
Buy Down Interest Rate
Buyers have a tool that can be used to help in this high-rate market where sellers are willing to negotiate. We have successfully negotiated to have the seller provide a credit that can be used by the buyer to "buy down" their interest rate. A negotiated seller credit of $4,000 will reduce the interest rate buy on full percent on a $400,000 loan (1 percent of the loan amount). Buyers who plan on buying a home they plan on staying for longer than 5-years should consider using their funds to buy down the rate.