Mortgage rates spike by most since Trump's election

by Bloomberg 11 Oct 2018

U.S. mortgage rates, already at a seven-year high, jumped the most since the week after President Trump was elected.

The average rate for a 30-year fixed mortgage was 4.9 percent, up from 4.71 percent last week and the highest since mid-April 2011, Freddie Mac said in a statement Thursday. It was the biggest increase since Nov. 17, 2016, when the 30-year average surged 37 basis points. The average 15-year rate climbed to 4.29 percent from 4.15 percent, the McLean, Virginia-based mortgage finance company said.

Rising mortgage rates have cut into affordability for buyers, especially in markets where home prices have been climbing faster than incomes. That’s led to a slowdown in sales. Contracts to buy previously owned properties in the U.S. declined in August by the most in seven months, according to data from the National Association of Realtors.

“Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand,” Freddie Mac Chief Economist Sam Khater said in the statement. While rates are still historically low, “the primary hurdle for many borrowers today is the down payment, and that is the reason home sales have decreased in many high-priced markets.”

With this week’s jump, the monthly payment on a $300,000, 30-year loan has climbed to $1,592, up from $1,424 in the beginning of the year, when the average rate was 3.95 percent.