H
ome sales have been on the rise, but a recent surge in mortgage rates may disrupt this trend. The average 30-year fixed-rate mortgage has risen to 6.93%, causing a slowdown in mortgage applications, which serve as an indicator of future home buying activity. According to Sam Khater, Freddie Mac's chief economist, the strong economy is driving up mortgage rates and exacerbating housing affordability issues, particularly for first-time buyers who are more sensitive to interest rates.

    Mortgage rates have hit a six-month high, posing a significant challenge for first-time buyers, notes Jessica Lautz, deputy chief economist at the National Association of REALTORS. At the current rate average, a monthly mortgage payment on a $400,000 home with a 20% down payment would be around $2,114, while a 10% down payment could result in a monthly payment of $2,378.

    While higher rates may further strain housing affordability, existing homeowners looking to move may be less affected. Lautz notes that homeowners are leveraging their accumulated housing wealth – an average of $147,000 over the past five years, according to NAR research – to offset higher mortgage rates.

    Freddie Mac reports the following national averages for the week ending Jan. 9:

    30-year fixed-rate mortgages averaged 6.93%, up from last week's 6.91% and 6.66% this time last year.

    15-year fixed-rate mortgages averaged 6.14%, up from 6.13% last week and 5.87% a year ago.