Meanwhile, mortgage rates are still hovering close to 7%, nearly double what they were two years ago when low rates powered a surge in home-buying.
High rates have provided “golden handcuffs” for current homeowners, as it’s more attractive and affordable to stay put with cheaper borrowing costs rather than moving and taking on a more expensive mortgage rate.
And with Federal Reserve Chairman Jerome Powell signaling last week that more interest rate hikes are still on the table, mortgage rates may not come down much anytime soon.
Edward Seiler, the Mortgage Banker’s Association’s associate vice president for housing economics, told Insider in a recent interview that new home buyers are facing the least affordable market ever.
The group’s Purchase Applications Payment Index, which measures borrower affordability conditions, reached a record high in June.
“For new home buyers, this is the worst situation since the end of the Great Recession,” Seiler said. “Current homeowners that were lucky enough to get a 2.75% interest rate in 2022 are in a great position, but for new home buyers looking to buy a first home, or those looking to move to another home, it’s a very daunting proposition.”
