US mortgage rates jump to highest level since 2019

The Federal Reserve yesterday raised its benchmark rate by a half point, the biggest bump since 2000, and signaled further hikes to come in its effort to cool inflation and the overheated housing market. Higher mortgage costs — already up more than two percentage points this year — may increasingly push out would-be homebuyers and ease competition for a scarce supply of listings.

“While housing affordability and inflationary pressures pose challenges for potential buyers, house-price growth will continue but is expected to decelerate in the coming months,” Sam Khater, Freddie Mac’s chief economist, said in the statement.

Families typically spent 18.7% of their income on mortgage payments in the first quarter, up from 14.2% a year earlier, data from National Association of Realtors showed this week.

At the current 30-year average, a borrower with a $300,000 mortgage would pay $1,660 a month, $377 more than at the end of last year.

“With much higher monthly payments, buyers who don’t have savings for a large down payment risk being priced out of the market,” said Joel Berner, senior economic research analyst from Realtor.com. “Unfortunately, this is occurring just as nationwide rents reach an all-time high, making saving more difficult for those looking to buy their first home.”