5 things you need to know about the mortgage loan interest rate crunch this week
- The average 30-year fixed mortgage loan interest rate has climbed back above 7.2%, marking the highest level in over six months and adding $300+ to the monthly payment on a typical home compared to last year.
- Lenders are now tightening credit scores required for the best rates; borrowers need a FICO score of at least 740 to avoid paying an extra 0.5% on their mortgage loan interest rate.
- A shock inflation report from the Bureau of Labor Statistics is the primary driver behind this week’s spike, with markets now predicting the Federal Reserve will delay any rate cuts until at least late summer.
- Refinance activity has plummeted nearly 40% week-over-week as homeowners locked into sub-4% rates refuse to trade them for the current elevated mortgage loan interest rate environment.
- Despite the high rates, cash-out refinances are surging among homeowners who need emergency funds, with lenders charging a premium and pushing effective rates toward 8% for these transactions.