Mortgage rates had been stuck around 3.4% for much of the summer, but they finally took their biggest leap in over two months this week. While they only increased about an eighth of a percent, it was enough to hurt stocks of the nation’s top homebuilders.
Significant increases in the average mortgage rate can send shockwaves throughout the entire housing market. Sellers tend to decrease the price of their homes in an effort to promote affordability, fewer buyers are able to afford homes, lending institutions tend to see fewer refinances, and real estate agents produce fewer sales.
While this week’s jump in rates is hardly considered significant in the grand scheme of things, it’s worth considering the impact of future rate hikes. Currently, we’re experiencing some of the lowest mortgage rates in history – in fact, in the last forty years, the average rate is over 8 percent! As the economy gains further momentum in 2017 and 2018, industry experts anticipate that rates will slowly increase and eventually return to historically normal levels.