Mortgage interest rates are high, with the 30-year mortgage reaching its highest level since November 2008

Compared to the previous week, mortgage interest rates for all types of loans increased. In fact, rates have moved dramatically since January. From 30-year fixed loans to 15-year fixed loans all saw their rates rise. The rise in mortgage interest rates has been the talk of the town and has caused concern in the housing industry.

Mortgage Interest Rate Increases

According to data compiled by Bankrate, the 30-year fixed mortgage interest rate has risen more than 6 percent as the Federal Reserve has taken action against inflation. As of October 4, the current average rate for a 30-year fixed mortgage is 7.06 percent. This represents an increase of 47 basis points since the same time last week. The current rate is about 2X higher than it was at 3% at the same time in 2021. Notably, the jump of over 6% in 30-year mortgage rates is the highest since November 2008. At current rates, those affected will have to pay a principal + interest of €662.62 for each €100,000 loan. This means that there is an additional €31.87 compared to last week.

The fear is that these increases will continue for some time. In addition, the central bank raising its own interest rates to counteract high inflation is the main factor contributing to the rise in mortgage interest rates. At its September meeting, the Federal Reserve once again raised rates. Greg McBride, CFA, Bankrate’s chief financial analyst, said:

“The cumulative effect of this sharp rate hike has cooled the housing market and caused the economy to begin to slow, but has done little to bring inflation down.”

In addition to the 30-year fixed mortgage rate, the 15-year fixed mortgage rate also rose to 6.16 percent from 5.80 percent last week. In addition, 5/1 ARMs rose from 4.90 percent to 5.25 percent in one week.

Rising rates raise concerns in the housing market

Rising mortgage rates have impacted the overall housing market as the bubble gradually cools.

Increasing a 15-year mortgage results in an increase in principal and interest of about €607 on each €100,000. At the same time, a 5/1 variable rate mortgage would cost about €547 for each €100,000.

“All too often, some homeowners take the path of least resistance when seeking a mortgage, in part because the home buying process can be stressful, complicated and time consuming. But when it comes to the possibility of saving a lot of money, finding the best deal on a mortgage has a great return on investment. Why leave that money on the table when all it takes is a little more effort to find the best rate, or lowest cost, on a mortgage.”