Mortgage rates hit 7-year high amid slowing housing market

Would-be homebuyers have another reason to be concerned: mortgage rates rose to nearly 5 percent, the highest in more than seven years and the biggest weekly increase in two years.

Rising mortgage rates slow the housing market, which is an indicator of the overall economy. Long-term rates are now up nearly a full percentage point from the start of 2018, the Wall Street Journal reported.

According to Freddie Mac, the average 30-year fixed-rate mortgage is 4.9 percent. Although rates have been rising for months, 5 percent isn’t that high compared to the decade before the financial crisis.

“There’s almost a generation that has been used to seeing 3 percent or 4 percent rates that’s now seeing 5 percent rates,” Vishal Garg, founder and CEO of Better Mortgage, told the Journal.

In recent months, both Wells Fargo and JP Morgan announced significant layoffs to the consumer mortgage divisions, which they attribute to rising interest rates and slowing sales.

Sellers may be forced to reduce their prices if financing continues to become more expensive for buyers, market pros said. [WSJ] — Katherine Kallergis