Mortgage Rates in January 2023
Mortgage rates are defined as the fees incurred while obtaining a loan to fund the purchase of a home. Because real estate prices are very high, many people cannot pay for houses with cash, they have to opt to extend the dues over very long periods. It may take over thirty years, to make your monthly payments affordable.
According to data by Bankrate, in January 2023, there was a drop in the average mortgage rates across the board. Rates for fifteen-year fixed, thirty-year, jumbo loans, and 5/1 ARMs all fell.
Mortgage rates have recently been on the rise, with the thirty-year fixed rate already exceeding the previously inconceivable level of 7% as Federal Reserve tightens its reins on inflation.
How are they affecting the real estate industry?
If there is a significant rise in inflation, the Fed might raise the rates of federal funds to decrease the money supply and decrease the inflation rate as well. This rise in the rates of federal funds can cause a rise in the mortgage rates and a rise in the mortgage rates can decline the home buying demand, ultimately leading to a decline in housing prices.
Price Decrease in Toronto
In Greater Toronto Area, the average housing sold-out price decreased 9 percent year-over-year to around $1,051,216. As we know that Toronto has various construction styles which have different prices. There is a decrease of 13 percent in the average price of detached home year-over-year to around $1.38 M. A twenty-two-month fall, the average housing price in Toronto has not been this less since 2021.
If we talk about the semi-detached house, its average housing price decreased by around 15 percent year-over-year to around $1.01 M. Another important construction style is the townhouse and its average price has decreased by 16 percent year-over-year to around $954. At last, we have condominiums, but its price remained the same year-over-year.
Price Decrease in Overall Real Estate
As we move into 2023, a watchful eye is maintained by housing experts on the country’s economy, which is pulled by high inflation in all directions, recession fears, ongoing geopolitical uncertainties, and steep interest, to name some.
The last few years have been red-hot, especially for the real estate market, there are many signs that correction is underway, still, it has been a little slow going. The mortgage rates are increasing to double costs as compared to a year ago.
Nationwide housing prices are still rising on the monthly basis despite a fall in total sales. This makes it very harder for so many homebuyers to get access to affordable houses.
If we look at the existing median housing sale prices are up 3.5 percent to around $370,700 as compared to one year ago. This data is stated by the National Association of Realtors. It was around the 129th month consecutively year-over-year rise in the prices, a record streak, even the housing prices have decreased from a record high of around $413,800 in the last year.
