The housing industry has started showing signs of an imminent downtrend, with mortgage rates rising faster than experts predicted. The average contract rate for a 30-year fixed-rate mortgage crossed 5% last week, making customers pessimistic about the housing market. As a result, home sellers are being forced to reduce the asking prices for their homes.
Surging inflation, the possibility of aggressive interest rate hikes this year, and the continuing uncertainty surrounding the Russia-Ukraine war are the primary drivers of increasing mortgage rates. Joel Kan, a Mortgage Bankers Association economist, said, “Mortgage application volume continues to decline due to rapidly rising mortgage rates, as financial markets expect significantly tighter monetary policy in the coming months.” In addition, Western sanctions on Russia have intensified worldwide supply chain disruptions. This has also been leading to rising input costs, marring the growth prospects of housing companies.
