Someone who closes on a house this month will be paying twice the mortgage rate of a year ago. The average rate on a 30-year fixed-rate mortgage reached 6% this week for the first time since the recession days of 2008, reports the New York Times. That's up from 5.89% last week and 2.86% compared to the same week in 2021, according to mortgage giant Freddie Mac. For homebuyers, the difference is huge, resulting in hundreds of dollars more per month in payments, per the Wall Street Journal. The 6% milestone (the rate was 6.02% on Thursday) is expected to further cool down a once red-hot housing market.
Mortgage applications already were dropping—down 1.2% last week from the previous week—and the rising rates are expected to keep that trend on track, per CNBC. Home prices are still up compared to last year, with a median sales price for an existing home north of $400,000, but sales of existing homes had fallen six straight months as of July. The higher rate is one of the most tangible, if indirect, results of the Federal Reserve's recent moves to keep inflation in check, notes the Journal. The Fed is expected to put another interest rate hike into effect next week. (Read more mortgage rates stories.)