'Kind of crazy': Mortgage rates soar, hurting housing affordability

PROVO – The cost of homebuying is going up as mortgage rates have hit their highest level in several years.

The weekly average for a 30-year fixed-rate mortgage sits at 7.28%, according to Freddie Mac. It's the highest week-to-week jump since October 2022, the Associated Press reported. Higher rates make it more expensive to borrow money to buy a house.

At the same time, mortgage applications fell by 6% week over week, the Mortgage Bankers Association said.

"Mortgage rates jumped to their highest level in almost three years, pushing borrowers to the sidelines," said Joel Kan, the organization's vice president and deputy chief economist.

Christian and Sadie Hawkins bought a townhome in Provo two years ago. Their interest rate was 5.3%.

"At the time, 5.3% felt so high," Christian Hawkins told KSL.

In hindsight, he's counting his blessings.

"I have a couple coworkers who are in the process of buying homes, and it's tough," he said. "They're telling me their rates, and yeah, I feel lucky."

Brigham Young University economics professor Christian vom Lehn said rates today are about a full percentage point higher than one year ago. That's a significant difference in monthly payments for homeowners.

He said mortgage rates are rising due to inflation, expectations about the economy and the war in Iran, which has led to higher energy costs.

"If you want to borrow money, you've got a lot of competition," vom Lehn said. "A lot of other people are trying to borrow money."

With higher rates – if fewer homebuyers get into the market – does this mean home prices will fall? The median sales price for all housing types in Utah – including single-family, townhomes and condos – sits at $520,000, according to a recent report from the Kem C. Gardner Policy Institute at the University of Utah.

"This may not manifest as a big drop in housing prices," vom Lehn said, "but maybe it manifests as a slowing down of the growth."

The Hawkinses said they'd like to buy another house, but not at current rates.

"It's just kind of crazy," Sadie Hawkins said.

For now, they're content to enjoy what they have.

Still, "it would be nice to see those rates come down a little bit," Christian Hawkins said.

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