Santa Barbara Real Estate

The State of Mortgage Rates and Decoding the Real Estate Market

ABC News Chief Business Correspondent Rebecca Jarvis examines if now is the time to buy, refinance or wait to buy a home.

MORTGAGE RATES SOAR TO 7.22% AFTER STRONG ECONOMIC DATA

The average rate on the popular 30-year fixed mortgage hit 7.22% on Thursday, according to Mortgage News Daily. That’s the highest point since early November.

For a homebuyer taking out a $400,000 mortgage, the monthly payment of principal and interest rose to $2,720 from $2,637 in just one week.

For sellers, higher mortgage rates have created a so-called golden handcuff effect. The vast majority of homeowners today have mortgages with interest rates below 4% or even below 3%.

“Recent data indicated that nearly 82% of home shoppers reported feeling locked-in by their existing low-rate mortgage, while around 1 in 7 homeowners without a selling plan cited their current low rate as their reason for remaining on the sidelines,” said Jiayi Xu, an economist at Realtor.com.

Because of that, there is currently a critical shortage of homes for sale, with year-to-date new listings now 20% behind last year’s pace.

The Real Estate Scene
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Mark Danforth Lomas

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