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Buying a House Is About to Get a Lot More Expensive

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Affordability

Buying a House Is About to Get a Lot More Expensive

A large share of homebuyers will soon be priced out by higher mortgage rates as the Fed continues to target the housing market in its race to tame inflation


September 14, 2022
Small house, stack of cash, and coins on top of tax forms
Image: Stock.adobe.com

A housing reset is expected to accelerate in the coming months as the Fed pushes borrowing costs beyond 6% to tame stubborn inflation. As a result, the prospect of homeownership will be pushed beyond reach for a larger share of would-be buyers.

Mortgage rates have more than doubled in the past year alone, rising from an average 2.88% in Q3 2021 to 5.89% during the week ending Sept. 8, 2022, Realtor.com reports. Along with rising home prices, a 30-year fixed mortgage rate on the cusp of 6% makes the median monthly mortgage payment nearly 63% more expensive than it was during the same time a year ago and over 78% more expensive than two years ago.

Many experts anticipate mortgage rates will cross the 6% threshold by the end of the year—if not sooner.

“Higher mortgage rates combined with still-high home prices are making it challenging for homebuyers as we head into what historically has been the best time of the year to find a better deal,” says Realtor.com Senior Economist George Ratiu. “Something has to give.”

Read more

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