Interest rates near 6 percent

Mortgage rates have continued higher, nearing 6 percent. Fixed rates on a 30-year mortgage have climbed to 5.81 percent, compared to 3.2 percent a year ago. The reason: The Federal Reserve has hiked rates in a bid to cool inflation and avoid a recession.

As a result, buyers of mid-priced homes are facing monthly payments increases of $400 or more compared to last year. For example, a $300,000 loan at 5.23 percent would cost a borrower about $1,653 per month. At this week’s 5.78% average, the loan would cost $1,756—an extra $1,236 per year.

Rates have climbed over 2 percent since January. Combined with high prices for houses, we’ve seen a noticeable decline in home sales. The silver lining is that the NOVA market will see more inventory come onto the market, giving more opportunities to buyers. The market remains hot but is definitely softening after two years of historic activity.

Builders of new homes have cut construction as sales have leveled off.

 

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