Mortgage Rates Tick Back Up Above 5%, Another Challenge for First-Time Home Buyers

Abstract

One basis point is equal to one hundredth of a percentage point, or 1% of 1%. The average rate on the 15-year fixed-rate mortgage rose 33 basis points over the past week to 4.59%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.43%, up 18 basis points from the prior week. "The consequence is that house prices likely will continue to rise, but at a slower pace for the rest of the summer." Elevated home prices continue to be a challenge for first-time buyers who may have experienced a bout of relief when rates dipped below 5% last week. According to a separate report from the National Association of Realtors also released Thursday, 80% of U.S. metros saw their median single-family existing home sales price increase by double digits from the previous year. The price of a median single-family home that's not new construction rose to $413,500, up 14.2% from the previous year. The monthly mortgage payment on a typical existing single-family home if a family pays with a 20% down payment has jumped by $444 to $1,841, with rates rising from the first quarter to the second quarter of this year. "Home prices have increased at a pace that far exceeds wage gains, especially for low- and middle-income workers," Lawrence Yun, the chief economist at NAR, said in a statement. The NAR said that 44% of sales of single-family existing home sales came from the South in the second quarter.