Last week, the rate for the most common kind of mortgage rose substantially. The average rate on the 30-year fixed mortgage surged on Friday, indicating a 24 basis points rise to 4.95%. It is 164 basis points higher than the year-ago value. With both rates and prices being at significantly high levels, the median mortgage payment is now more than 20% higher than a year ago.
The housing market spring selling season is likely to be burdened by the rate increases, as the surging rates could limit what buyers can bid. Moreover, Ian Shepherdson, chief economist and founder of research consulting firm Pantheon Macroeconomics, has predicted existing home sales to drop 25% between February and the end of summer.
