{"id":23217,"date":"2024-02-01T13:49:59","date_gmt":"2024-02-01T13:49:59","guid":{"rendered":"https:\/\/www.anthonydidonato.net\/wordpress\/?p=23217"},"modified":"2024-02-01T13:49:59","modified_gmt":"2024-02-01T13:49:59","slug":"buyers-embrace-adjustable-mortgages-as-rates-surpass-7","status":"publish","type":"post","link":"http:\/\/www.anthonydidonato.net\/wordpress\/buyers-embrace-adjustable-mortgages-as-rates-surpass-7\/","title":{"rendered":"Buyers Embrace Adjustable Mortgages as Rates Surpass 7%"},"content":{"rendered":"\n

Rising interest rates have increased the average monthly loan payment by a whopping $1,000 year over year.<\/p>\n\n\n\n

With the rate for a 30-year mortgage rising to 7.08% this week\u2014the highest average since April 2002, according to Freddie Mac\u2014the average monthly loan payment is now $1,000 more than a year ago, Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS\u00ae, writes on the Economists\u2019 Outlook blog.<\/p>\n\n\n\n

That\u2019s prompting a sharp pullback in the housing market as home buyers digest the higher rates. Mortgage applications for home purchases\u2014a gauge of homebuying activity\u2014are nearly half of what it was a year ago, the Mortgage Bankers Association reported this week.<\/p>\n\n\n\n

Trying to snag a lower rate, more home buyers are reaching for an adjustable-rate mortgage, which tend to have lower introductory rates for a set period of time before resetting. Though ARMs are viewed as a riskier loan product, home buyers are being tempted: This week\u2019s rate for a 5-year ARM is 5.96%. The share of home buyers applying for an ARM has more than quadrupled since the start of the year, MBA reports.<\/p>\n\n\n\n

Higher mortgage rates are creating a \u201cgreater stagnation in the housing market,\u201d says Sam Khater, Freddie Mac\u2019s chief economist. \u201cAs inflation endures, consumers are seeing higher costs at every turn, causing further declines in consumer confidence this month. In fact, many potential home buyers are choosing to wait and see where the housing market will end up, pushing demand and home prices further downward.\u201d<\/p>\n\n\n\n

S&P\u2019s CoreLogic Case-Shiller Index shows home prices fell at a record pace in August, dropping 2.6% in monthly comparisons from a year ago. Existing-home sales also are sliding, down 24% year over year in September, according to NAR data. And problems continue to brew for the new-home market, which saw sales plunge nearly 18% in September compared to a year earlier, prompting home builders to press the brakes on future construction, the Commerce Department reports.<\/p>\n\n\n\n

Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 27:<\/p>\n\n\n\n