What does a Fed rate hike mean for mortgages

The rapid rise in mortgage rates means that homebuyers will need to pay much more for a home loan than they did just eight months ago.

In November, the 30-year fixed-rate mortgage, the most popular home loan product, was barely 3 percent. With the rate approaching 6 percent, the cost added to a 30-year mortgage is hundreds of thousands of dollars.

A jump in rates from 3 to 6 percent increases the cost of a standard 30-year fixed-rate mortgage by more than half the home’s sale price.

For a $250,000 home, the mortgage would cost an additional $128,000 over 30 years. This translates to a monthly mortgage bill of over $356. For a home purchased at $750,000, homeowners will pay an additional $1,067.

This week, mortgage rates were out Biggest jump in one week in decades. The 30-year fixed rate mortgage is now 5.78 percent, a level not seen since 2008, according to data from Freddie Mac.

High rates could be a major factor in deciding whether to buy a home and the signs of the downward housing market were already evident. this year. While Realtor.com It originally expected a 6.6 percent increase in home sales this year, according to a recent property listing website. downgraded to a decline of 6.7 percent in 2022 compared to the previous year.

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