Higher Mortgage Rates Vexing Homeowners Who Want to Sell
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Here's your money briefing for Friday, September 23rd. I'm J.R. Whelan for The Wall Street Journal. It's getting a lot more expensive to buy a house. The average 30-year fixed mortgage rate hit 6.29% this week, the highest level in almost 15 years. That's creating a dilemma for homeowners who were looking to sell.
Many, many households either bought a home in the last couple of years at very low rates or they refinanced their mortgage at very low rates. And for those households, it's a lot harder to imagine selling their home given how much more they would expect to have to pay for that new home with higher mortgage rates and higher home prices.
Coming up, we'll talk to WSJ housing market reporter Nicole Friedman about the ripple effect that's likely to have on the housing market and home prices going forward. That's after the break.
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What is the episode about and why are rising mortgage rates newsworthy?
As mortgage rates continue to rise, homeowners are being faced with a tough choice. Sell and take on a mortgage rate in a new home that's up to three percentage points higher than when they first bought, or stay put in their current home and keep a low rate locked in. That quandary and its potential impact on the housing market got WSJ reporter Nicole Friedman's attention, and she joins us with more. Nicole, thanks so much for being with us.
Thank you for having me.
So, Nicole, mortgage rates have risen nearly three full percentage points in just the past 12 months. What impact are these higher rates having on the housing market?
So higher mortgage rates are having a huge impact on the housing market. The market really boomed in 2020 and 2021 as the pandemic caused more people to work from home, go to school from home. A lot of people decided they needed more space. They didn't need to be as close to their offices. And mortgage rates were the lowest they'd ever been. So a lot of buyers rushed into the market, took advantage of the opportunity to move. And now we're really seeing an abrupt slowdown. as rates have basically doubled in the last few months, really since the start of the year. And so it's made that monthly payment for buyers much more expensive, hundreds of dollars per month more than it would have been at the rate of a year ago.
And so that's really priced a lot of buyers out of the market and made it much less competitive. There's a lot less demand right now to buy homes.
Now it's been a seller's market for a while. Is that likely to change?
So it was a really strong seller's market in 2020 and 2021. We had stories of long lines at open houses, homes on the market getting 20, 30, 40 offers, bidding wars, buyers having to waive inspection, waive appraisal. And that is really not true anymore. It's a much more balanced market. Buyers are able to ask for more concessions from sellers. They aren't having to pay as much over asking. But it's not necessarily a buyer's market yet either because the inventory of homes for sale, while it's higher than it was earlier in the year when it was at basically a record low,
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