As of this writing, mid-June 2022, the average Conventional 30-year fixed mortgage rate is over 6%. At the beginning of this year, it was around 3.25%. To determine an interest rate for a consumer, there are several factors that are considered, such as credit score, debt to income ratio, the loan amount, the loan to value and the loan product which could be Conventional, FHA, VA, USDA, or Jumbo. This interest rate increase was extremely drastic in such a short period of time. There is concern that rising rates will cause a huge amount of buyer pullback, possibly sending home prices plunging. But housing inventories are still low, so a full-fledged real estate market crash isn't likely to happen.
It is costing more to finance a home today than it did at the beginning of the year. It's unfortunate for some homebuyers who at the start of the year decided to wait to see if the house prices would come down, to now see that the prices didn't and yet the rates went up, and now it's beyond their budget or what they can now qualify for. With policy tightening by the Fed to curb inflation, rates may push higher still. Between April 1971 and April 2022, the 30-year mortgage rate averaged 7.77%, October 1981 being the highest, over 18% and April 2021 being the lowest in the high 2% 's. The last time the rates were in the 6%'s was from 2005 through 2009.
Robert Groves, Senior Mortgage Broker
5635 N.E. Elam Young Parkway, Suite 308
Hillsboro, OR 97124