Higher Mortgage Rates Fail to Cool Housing Market

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Finance Nouvelles

Mortgage Rates,Housing Market,Homeowners

The average homeowner with a near record-low mortgage rate would see their monthly payment shoot up 132%, or roughly $1,800, in order to move up to a 25% more expensive home. Higher mortgage rates usually cool both prices and demand, as they did last year, but that's not the case now. There are still too few homes for sale because current homeowners can't afford to move, and it's keeping prices high.

The average homeowner with a near record-low mortgage rate would see their monthly payment shoot up 132%, or roughly $1,800, in order to move up to a 25% more expensive home. Higher mortgage rates usually cool both prices and demand, as they did last year, but that's not the case now. There are still too few homes for sale because current homeowners can't afford to move, and it's keeping prices high. Home prices in February were 5.

5% higher than they were in February of last year, according to CoreLogic. That annual comparison is shrinking slightly, but the price gain from January to February was nearly twice what it normally is for that time of year, suggesting this spring's market started out strong despite higher interest rates. The average rate on the 30-year fixed mortgage hit its latest high in October, briefly crossing over 8%. It then dropped back into the 6% range for much of December and all of January. It rose back over 7% in February, which should have cooled the marke

 

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