By Diana Olick -
CNBC
It's a double whammy for would-be homebuyers: Not only are interest rates rising, but it's getting harder to get a home loan.
Median interest on 30-year fixed mortgages topped
7%
late last week, according to Mortgage News Daily, and was expected to rise to
7,125%
this week.
Rates have been above 7% for several days.
Meanwhile, the availability of mortgage credit is now at the lowest level since March 2013, when the housing market was slowly recovering from the financial crisis at the end of the previous decade.
The availability of mortgage credit fell for the seventh consecutive month in September, 5.4% less than in August, according to the monthly index of the Mortgage Bankers Association.
Interest rates on bank loans make it increasingly difficult to buy homes in the US.
Sept.
18, 202201:43
While lenders may be desperate to go out of business as demand for mortgages plummets due to high interest rates, they are also more concerned about a faltering economy
that could lead to people being late in making their mortgage payments. .
Executives and economists have warned that the United States could slip into a recession in the coming months, as the Federal Reserve raises interest rates to fight rising inflation.
“We are seeing less appetite (from lenders) to participate in loan programs for people with low credit scores and where the [property loan-to-value ratio] is high,” said Joel Kan, an economist at the Mortgage Bankers Association. , it's a statement.
[Inflation reaches 8.2% in September: up 0.4% compared to August]
Mortgage delinquencies (delays in mortgage payments) are close to historical lows at the moment.
Although new repossessions (
foreclosures
, in English) of sold properties increased 15% between July and August, they are still 44% below pre-pandemic levels, according to Black Knight, a mortgage analysis and software company.
The availability of credit was the one that decreased the most in the case of the so-called
jumbo
loans (when the value of the property to be purchased is very high), to which more buyers have to resort today due to the increase in prices. of housing, according to the Mortgage Bankers Association.
The average extra money retirees will receive in their Social Security check
Oct. 13, 202201:54
Rising prices have also prompted more borrowers to turn to adjustable rate mortgages because they offer lower interest rates.
These types of loans can be fixed for up to 10 years, but are considered higher risk mortgages.
Borrowers are clearly worried that mortgage rates will go even higher.
Those interests are under the influence of the increases made by the Federal Reserve.
“The Fed is determined to raise rates as high as it can and keep it there for as long as it can, even if it means the economy suffers,” Matthew Graham, chief operating officer of Mortgage News Daily, wrote on his website.
Graham pointed out that the Fed does not take into account mortgage interest rates or the housing market because house prices are high and a correction is "good and necessary."
