8% Mortgage Rates are Officially Here: Watch Out US Housing Market

• Average 30-year fixed mortgage rates increased over 8% for the first time in decades as of Friday, September 29th.
• The average rate in California for putting 20% down is 8.8% for a FICO score in the range of 740 to 759.
• The best rates are available when putting at least 20% down, buying a primary residence, and having a credit score over 740.
• The average rates for exceptional credit are 8.10% for a 30-year fixed, 7.92% for an FHA, 7.27% for a jumbo, and 7.33% for a 15-year fixed.
• The average rates are for new purchase loans with an 80% loan-to-value ratio and no points for a borrower with a FICO score in the range of 700 to 760.
• The median home price nationwide has increased by 12% over the past two years, while rates have more than doubled, decreasing buyer purchasing power by about 50%.
• Homebuyers will pay approximately $393,000 more in interest paid over the life of a 30-year fixed-rate loan at 8.1% than at 3%.
• The quadruple whammy for homebuyers includes increased home prices, doubled rates, decreased purchasing power, and increased interest payments.

The average 30-year fixed mortgage rates in the US have increased to over 8% for the first time in decades, with the average rate in California for a FICO score between 740 to 759 being 8.8%. According to Investopedia, the average rate for people with exceptional credit is 8.10% for a 30-year fix, FHA is at 7.92%, jumbo is at 7.27%, and a 15-year mortgage is at 7.33%. When compared to two years ago, the median home price has increased by 12%, but rates have more than doubled, decreasing purchasing power by 50%. Homebuyers are facing a quadruple whammy, with home prices increasing, rates more than doubling, buyer purchasing power decreasing by 50%, and interest paid over the life of a 30-year fixed rate loan increasing by $393,000 more than the original purchase price. This has led to all-time record lows in the number of contracts being signed between buyers and sellers of existing houses. The increase in mortgage rates is a result of the Federal Reserve’s recent announcement of tapering its bond-buying program and its indication of an interest rate hike in 2022.

Bullet Summary:

• The average 30-year fixed mortgage rates in the US have increased to over 8% for the first time in decades.
• Homebuyers are facing a quadruple whammy due to increasing home prices, rates more than doubling, purchasing power decreasing by 50%, and interest paid over the life of a 30-year fixed rate loan increasing by $393,000 more than the original purchase price.
• The increase in mortgage rates is a result of the Federal Reserve’s recent announcement of tapering its bond-buying program and its indication of an interest rate hike in 2022.