Impact of Higher Mortgage Rates Revisited

The Freddie Mac Survey Rate (30 year, fixed rate) for this week was just posted: 5.59%

That brings the June average to 5.44%:

revised price for equal monthly payment: $195,300.00

Impact of Higher Mortgage Rates

The above graph tracks the monthly mortgage payment assuming the median new home price and the Freddie 30 year mortgage rate.

March, 2009: home price $209,700; rate 4.81%; payment $1,101.49

April, 2009: rate 4.86%; to keep the same payment, price needed to drop to $208,500 (data released shortly)

May, 2009: rate 5.29%: to keep the same payment, price needed to drop to $198,600



That would be a 4.75% price drop in 1 month. Still shootin' greens partner?

Housing Market Speed Bump

The above graphs track the Freddie Mac Survey Reference Rate for 30 year (fixed rate) mortgages. The 2nd graph only goes back 1 year, so it is clear that borrowing has become decidedly more expensive for prospective homeowners. Fears of inflation have pushed longer term interest rates higher and, ironically, may serve to exacerbate the slowdown. If that is the case, inflation may very well be pushed even further off.