Mortgage misery! Average rate on a 30-year loan soars to 6.96 percent - meaning buyers now face paying an extra $1,000 a month on a standard property

Homebuyers faced more misery today as mortgage rates shot up to just below 7 percent - after rising for three weeks in a row.

Data from Government-backed lender Freddie Mac shows that the average rate on a 30-year fixed-rate mortgage is now 6.96 percent - more than double what it was two years ago.

It means that somebody buying a $400,000 home with a 5 percent deposit now faces paying an extra $1,000 a year if they bought today compared to August 2021. 

Mortgage rates have shot up in response to the Federal Reserve's relentless hikes to its funds rate.

The Fed has raised its funds rate 11 times in the last year and a half in a bid to tame red-hot inflation.

Data from Government-backed lender Freddie Mac shows that the average rate on a 30-year fixed-rate mortgage is now 6.96 percent - more than double what it was two years ago

But lenders' calculations on home loans are not directly tied to the Fed's funds rates and are instead dictated by the yield on 10-year Treasury bonds.

This is influenced by a combination of inflation, Fed actions and the response of investors.

The average deal on a 30-year mortgage has remained above 6.5 percent since the end of May but the latest rate is the highest since November. 

Freddie Mac chief economist Sam Khater said: 'There is no doubt continued high rates will prolong affordability challenges longer than expected.

'However, upward pressure on rates is the product of a resilient economy with low unemployment and strong wage growth, which historically has kept purchase demand solid.'

Experts have previously sounded the alarm over the influence rates are having on the property market.

The average deal on a 30-year mortgage has remained above 6.5 percent since the end of May but the latest rate is the highest since November

New York realtor Adie Kriegstein recently said she was seeing more and more homeowners interested in renting their properties rather than selling 

A family buying a $400,000 home with a 5 percent downpayment in August 2021 would have faced a monthly bill of $1,555. At the time, the average rate on a 30-year mortgage was 2.77 percent.

However, under today's rates, the same family would have to pay out $2,518. 

Last month a survey by Freddie Mac found 82 percent of property shoppers 'locked into' their current homes because they fixed their deals when rates were low. 

One in seven homeowners who were not planning to sell their home cited their current low rate as the main reason for staying put.

The number of new properties being listed in June was subsequently 20 percent lower than the same period last year.

Dailymail.com recently revealed that elevated rates were causing homeowners to become 'accidental landlords.'

Realtor Adie Kriegstein, who founded the NYC Experience Team at Compass, said at the time: 'We are seeing more people interested in renting across the board, with properties of all different sizes.

'There is so much uncertainty, it's making people very wary. I have one client on my books who recently decided to move out of the city so rented out his apartment here while he pays to rent somewhere else. It's definitely becoming a trend.'