Mortgage Rates Hit 2026 High

HELLO, I'M JENNIFER CRAWFORD. THANK YOU SO MUCH FOR JOINING US. IF YOU'RE THINKING OF BUYING A HOME IN SOUTHWEST FLORIDA AND YOU NEED A LOAN, YOU MIGHT BE IN FOR SOME STICKER SHOCK MORTGAGE RATES NOW TOPPING 7% HITTING THEIR HIGHEST LEVELS SO FAR IN 2026, ACCORDING TO FREDDIE MAC, THE AVERAGE MORTGAGE RATE FOR A 30 YEAR FIXED IS JUST OVER 7% COMPARED TO 6.3% ONE YEAR AGO. ECONOMISTS SAY WHAT LOOKS LIKE A SMALL JUMP IN THE PERCENTAGE RATE COULD HAVE A BIG IMPACT ON YOUR BANK ACCOUNT. FLORIDA GULF COAST UNIVERSITY ECONOMICS PROFESSOR AT THE LEGGARD COLLEGE OF BUSINESS. DOCTOR VICTOR CLAAR JOINS US NOW. THANK YOU FOR JOINING US IN STUDIO ONCE AGAIN. GREAT TO BE HERE THAT WE ARE SEEING MORTGAGE RATES RISE, HOUSING PRICES ARE DECLINING. THE GOING IN THE OPPOSITE DIRECTION. THIS IS THE HIGHEST MORTGAGE RATE WE HAVE SEEN SINCE JANUARY OF 2025, WHAT DOES THIS MEAN FOR THE PERSON OUT THERE THAT WAITING TO BUY A HOME? >> IN FLORIDA? SO THE GOOD NEWS IS IF YOU'VE BEEN WAIT WAITING PATIENTLY TO BUY A HOME, IT IS TRUE. AS YOU POINTED OUT, HOUSING PRICES HAVE MODERATED. WE NO LONGER HAVE THESE HOUSES THAT ARE ON THE MARKET FOR A DAY OR 2. AND THERE'S A BIDDING WAR THAT PERIOD THIS BEHIND US. THE PROBLEM, THOUGH, IS EVEN IF YOU GET A LOWER PRICE POINT FOR THAT HOUSE, THE FINANCING MAY COST MORE BECAUSE A RECENT MORTGAGE RATE INCREASES. >> HOW MUCH DOES THIS KIND OF INTEREST RATE HIKE? IT MAY APPEAR NEGLIGIBLE, BUT IT CAN HAVE A BIG DIFFERENCE ON THE AVERAGE MONTHLY PAYMENT. TALK A LITTLE BIT ABOUT HOW THIS IMPACTS A HOMEOWNER'S MONTHLY PAYMENT TO HAVE THIS GO ABOVE 7%. >> HIGHER INTEREST RATES ARE NOT GREAT FOR BORROWERS BECAUSE A LITTLE TINY INCREASE IN THAT INTEREST RATE ACCUMULATE OVER THE LIFE OF THE LOAN IN A WAY THAT CAN MAKE IT VERY, VERY EXPENSIVE. >> NOW WE WERE DISCUSSING IT. WE'RE JUST GOING TO TAKE AN AVERAGE FOR SOUTHWEST FLORIDA. LET'S SAY A $500,000 SINGLE-FAMILY HOME 20% DOWN AND GOT A $400,000 LOAN. COMPARE NOW TO ONE YEAR AGO. WHAT KIND OF DIFFERENCE ARE WE TALKING ABOUT IN IN DOLLARS? >> FOR MONTHS COMPARED TO ABOUT ONE YEAR AGO? AND AGAIN, IT DOESN'T SOUND LIKE MUCH INTEREST RATES WENT FROM ABOUT 6.3% TO NOW AROUND 7% OR A LITTLE NORTH OF THAT. THAT MEANS THAT YOUR MONTHLY MORTGAGE PAYMENT OVER THE LOAN YOU'VE DESCRIBED 20% DOWN ON A $500,000 HOUSE. THAT MIGHT BE AS MUCH AS $200 MORE PER MONTH, WHICH MEANS THAT YOU MIGHT BE PAYING MORE THAN $2000 MORE PER YEAR AGAIN. IF YOUR BUDGET IS TIGHT, IT MAY NOT SOUND LIKE A LOT. BUT REMEMBER, THAT'S $200 MORE PER MONTH OVER 30 YEARS. >> THE FED MEETS THE END OF OCTOBER. WHAT IS THE EXPECTATION AND HOW THAT WILL ALSO POTENTIALLY AFFECT MORTGAGE RATES? >> SO WE GOT AN INCREASE OF THE MOST RECENT MEETING AND AT THE PRESS CONFERENCE AFTERWARD, THE CHAIR OF THE FED, KEVIN WARSH SOUNDED VERY HAWKISH, WHICH MEANS HE'S WATCHING INFLATION LIKE A HAWK AND BASED ON SHOTS THAT SOUND THAT HE GAVE TO THE MEDIA THERE IN THE PRESS CONFERENCE, PEOPLE ARE PESSIMISTIC ABOUT WHERE INTEREST RATES ARE HEADED. WILL PROBABLY GET ONE MORE INCREASE IN OCTOBER AND POP PROBABLY WILL PROBABLY GET AN ADDITIONAL INCREASE BEFORE THE YEAR IS OUT. >> SO WHAT DOES THAT MEAN FOR SOMEONE WHO'S JUST WAITING THINKING? WOW, THE PRICES ARE GOING DOWN. BUT GOSH, NOW THEY'RE SEEING THE INTEREST RATES GOING UP AND THEY NEED A MORTGAGE. >> SO YOU SHOULD NEVER GO INTO A HOUSE. YOU CANNOT AFFORD PERIOD FULL STOP. YOU SHOULD NEVER GET INTO A HOUSE. YOU CANNOT AFFORD. ON THE OTHER HAND, IF YOU KNOW YOU WANT TO FINANCE AND YOU'RE SICK OF PAYING RENT, THIS MIGHT BE A BETTER TIME THAN SAY LATER THIS YEAR TO FINANCE A NEW HOME. AND I GUESS THE GOOD NEWS IS IF INTEREST RATES DO EVER MODERATE, YOU CAN ALWAYS REFINANCE THE CATCH IS THAT REFINANCING HAS HIGH FIXED CLOSING COSTS. EVERY TIME THAT YOU CLOSE A NEW MORTGAGE, EVEN AT LOWER INTEREST RATES, YOU ALWAYS HAVE TO PAY THOSE FIXED COSTS OF REFINANCING. >> ALL RIGHT. AND GEOPOLITICAL INSTABILITY THAT FACTORS INTO THIS CORRECT? >> IT DOES. WE CONTINUE TO HAVE A LOT OF UNCERTAINTY. THE ALONG ALL KINDS OF SUPPLY CHAINS. AND AS LONG AS THAT MAINTAINS HIGH PRESSURE ON PRICES WERE GOING TO SEE THE FED CONTINUE TO WATCH INFLATION LIKE A HAWK. AND THERE MAY BE HIGHER INTEREST RATES IN SIGHT IN ORDER TO KEEP THAT INFLATION WHERE IT BELONGS. >> ALL RIGHT, DOCTOR CLARK, ECON GURU TO SEE YOU. LET HER COLLEGE OF BUSINESS. THANKS FOR JOINING US TODAY. YOU'RE WELCOME.