“Because of that, people are reluctant to be a move-up buyer - or even a move-down buyer.”Ībout 61% of all outstanding mortgages have an interest rate below 4%, including 23% that are below 3%, according to Apollo Group. “It’s very difficult to give up your home if you have a 2.9% mortgage,” said Liniger. That mortgage rate spike has frozen some housing activity by making purchases unaffordable for first-time homebuyers and unattractive for people who are locked into low-rate mortgages. What happens next will have huge impacts for home buyers. “By the end of the year, mortgage rates could be closer to 6%,” Yun said. Yun said he is “fairly confident” that inflation will continue to calm, aided in large part by easing rent growth, and this will free the Fed to halt rate hikes after moving one more time this month. “This is the top,” Yun told CNN on Thursday. Lawrence Yun, chief economist at the National Association of Realtors, is more optimistic about the direction of mortgage rates. The RE/MAX co-founder dismissed the argument from some that the Fed is done raising interest rates because inflation has cooled substantially. “We’re just going to have to learn to live with 6.5% or 7% mortgage rates for six to 18 months,” said Liniger. Interactive: See what housing affordability looks like where you live Liniger said homebuyers may be “stuck” with these interest rates for the foreseeable future. That’s’ the highest level since November. Mortgage rates climbed to 6.96% during the week ending July 13, up from 6.81% the week before, Freddie Mac said Thursday.

The Fed has taken extreme steps to fight inflation. The weekly average 30-year fixed-rate mortgage dropped to as low as 2.65% in January 2021, according to Freddie Mac.ĭirt-cheap borrowing costs, along with changes caused by the pandemic, set off an epic housing boom.

Interest rates plunged to historic lows early this decade as the Fed flooded the market with easy money in a bid to revive the Covid-riddled economy. “Everyone has been spoiled by the past 15 years of low interest rates,” Liniger, now the chairman of RE/MAX, told CNN.

After all, he recalls the early 1980s when the Federal Reserve’s war on inflation briefly spiked mortgage rates above 18%. Liniger, who co-founded real estate giant RE/MAX with his wife in 1973, doesn’t think mortgage rates are all that high today. Dave Liniger has spent the last half-century living through the ups and downs of the interest-sensitive housing market.

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