Mortgage rates ticked upward last week
The average mortgage interest rate for a standard 30-year fixed mortgage last week was 6.86%, an increase of 0.03 percentage points from the previous week’s 6.83%, according to Bankrate.
Thirty-year fixed mortgages are the most commonly sought out loan term. A 30-year fixed rate mortgage has a lower monthly payment than a 15-year one, but usually has a higher interest rate.
The average mortgage interest rate for a standard 15-year fixed mortgage was 6.28%, a decrease of 0.03 percentage points from the previous week’s 6.31%, according to Bankrate.
Fifteen-year fixed rate mortgages come with a higher monthly payment compared to its 30-year counterpart. However, usually interest rates are lower and you will pay less total interest because you are paying off your loan at a faster rate.
The average rate on a 5/1 adjustable rate mortgage (ARM) was 6.29%, which has no change from the previous week, according to Bankrate. With an ARM, you will most often get a lower interest rate than a fixed mortgage for say, the first five years.
But you could end up paying more or less after that time depending on your loan terms and how that rate follows the market.
When picking a mortgage, it is important to pick out a loan term or payment schedule. Usually you will be offered a 15 or 30-year loan term, but it is not uncommon to see 10, 20, or 40-year mortgages, according to CNET.
Mortgages can be fixed-rate or adjustable-rate. Interest rates in fixed-rate mortgages are set in stone for the duration of the loan.
Adjustable-rate mortgages only have interest rates set for a certain period of time before the rate adjusts annually based on the market.
Realtors are dealing with more runaway buyersthan ever before, as people become pickier amid a difficult real estate market.
Meanwhile, a new report by Quartz shows that almost 56,000 home-purchase agreements fell through in June, or 15% of all homes that went under contract that month, according to a Redfin report published Tuesday.
That’s the highest percentage of any June recorded by the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, blamed the rise in cold feet on a more selective buyer that is grappling with a more expensive market.
“They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to rationalize not getting everything on their must-have list,” Zubiate said.
Rafael Corrales, another Redfin agent located in Miami, said he has seen “nightmare scenarios” play out, including last-minute cancellations over small details. Around 2,500 home purchases were canceled in Miami last month, which is about 17.6% of homes that went under contract in June. But Corrales said the biggest issue is affordability.
The median home sale price reached a record $442,525 in June, with the average rate on a 30-year mortgage coming in at 6.92%.
On top of the high cost of homes on the market today and still-high mortgage rates, prospective home buyers are also getting bogged down by insurance, property taxes, HOA fees, and all the other costs associated with homeownership that have been exacerbated by inflation.
The lack of affordability in the market nationwide has caused home sales to see their biggest decline in eight months, according to Redfin. On a monthly basis, home sales fell 0.5% month in June – the largest drop since October 2023. And on a year-over-year basis, home sales dipped 1.1% and were 21.5% below pre-pandemic levels.