The average rate on the popular 30-year fixed mortgage jumped last week to over 3% and then jumped an additional 9 basis points to 3.1%. Just one week before, the rate was 2.93%.
Popular 30-Year Fixed Mortgage Rate Moved Up to 3.1% Last Week
Words and actions have consequences. Many experts attribute last week’s rise from 2.93% to3.1% in the 30-year fixed mortgage rate to the Federal Reserve’s Chair Jerome Powell’s comments last week about fiscal tightening shifts (tapering bond purchases and gradual rise in interest rates).
Others indicated that the decline in COVID cases was the case of this upward rate shift. Mathew Graham, CEO with Mortgage Daily News, said, “While the pace and volatility (of mortgage rates) will vary due to (many) factors, we have always been destined to move back toward higher rates as the pandemic subsides, and this week’s case counts suggest it’s subsiding again.”
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Mortgage Rate Moves Have Outsized Effect on Buyers
Even though mortgage rates are historically low, any change in mortgage rates has a huge effect on homebuyers simply because home prices are so high. Though moderating slightly, prices continue rising at double-digit paces for both existing and newly built for-sale homes.
First-time homebuyers are the most affected by home mortgage rate shifts. And last week’s data proves the point
The first-time buyer share of sales in August dropped to 29%, the lowest share since the beginning of 2019 when rates on the 30-year fixed were over 5%. This 29% share is in sharp contrast to first-time buyers representing approximately 40% (a market average) of all home sales.
Thanks to Mortgage Daily News and CNBC.