U.S. mortgage rates have moved sharply higher, creating another affordability challenge for prospective homebuyers already dealing with elevated home prices and borrowing costs. Freddie Mac reported that the average 30-year fixed mortgage rate was 6.95% for the week ending September 17, up from 6.76% a week earlier and 6.26% a year earlier, while the 15-year fixed rate increased to 6.26%. More recent Mortgage Bankers Association data showed the average contract rate on a 30-year fixed mortgage rising further to 7.12%, its highest level in more than two years, as higher Treasury yields and tighter monetary conditions pushed residential borrowing costs upward. The increase has significant consequences for affordability because even relatively small changes in mortgage rates can substantially alter monthly payments over a 30-year loan; Freddie Mac illustrates that principal-and-interest payments on a $300,000 mortgage rise from roughly $1,896 at 6.5% to about $1,996 at 7%. Higher financing costs can reduce purchasing power, discourage some first-time buyers and make existing homeowners with low-rate mortgages less willing to move, potentially limiting housing-market activity. The broader outlook remains challenging, with a Reuters survey of property experts indicating that mortgage rates are expected to stay comparatively high and decline only modestly over coming quarters.
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