(KRON) — One year ago, the average 30-year rate to buy a home was 2.86%. Those were definitely the good old days. However, now that rate has more than double to just over 6%, some have been priced out of the market.
While the cost of that new home you want to buy may be down somewhat from earlier in the year, that’s being offset by a spike in mortgage rates. The 30-year fixed rate climbed above 6% this week, more than double where it was a year ago.
That’s also the highest it’s been since 2008.
“This will impact first-time home buyers and entry-level buyers. It’s going to add a significant amount of money to their monthly payment,” said Realtor Dan McLean with Coldwell Banker.
McLean says this ever-increasing hike in mortgage rates is just one change the housing market has seen over the last several months
“The competitiveness is gone,” he said. “There’s not these 10-15 offers on the house. We’re seeing maybe one or two, three or four at the most less competition, less craziness. Less way overbidding, agents are pricing homes better at more like transparent pricing.”
Experts say mortgage rates are rising because the U.S. still doesn’t have a handle on inflation. The federal government has been raising interest rates in hopes it will squeeze demand and lead to lower consumer prices, but that hasn’t happened yet.
“My advice is to be patient,” said George Noceti who is a family wealth advisor with Morgan Stanley. “We’re not patient, we are absolutely not patient, we want a fix today.”
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Noceti says economic recovery will happen, but mortgage rates may not start moving down until the first or second quarter of next year. Until that time, he says it’s critical families don’t overextend themselves with a house they cannot afford.