Mortgage misery! Rates jump above 7 percent for the first time this year, new figures show

Homebuyers are now facing mortgage rates over 7 percent after deals jumped to their highest level so far this year. 

The average rate on a 30-year fixed-rate mortgage is now 7.1 percent, up from 6.88 percent last week. 

It marks the biggest weekly increase in nearly a year and is the first time rates have passed 7 percent since late 2023, according to data from government-backed lender Freddie Mac.

Home loans has been pushed up by the Federal Reserve's relentless tightening cycle which has taken interest rates to a 23-year-high.

In real terms, buyers now must fork out an extra $900 per month on an average home than if they had fixed a deal three years ago.

Higher mortgage rates have effectively frozen America's property market as most owners locked into 30-year deals when interest rates were at record lows.

Freddie Mac chief economist Sam Khater said: 'The 30-year fixed-rate mortgage surpassed 7 percent for the first time this year, jumping from 6.88 percent to 7.10 percent this week.

'As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year. 

'Last week, purchase applications rose modestly, but it remains unclear how many homebuyers can withstand increasing rates in the future.'

The US real estate market has benefited from record-low interest rates in recent years which has helped to fuel buyer activity.

In the week to April 15 2021, the average 30-year fixed-rate deal was hovering at 3.04 percent.

It means a buyer purchasing a $400,000 home with a 5 percent downpayment faced paying $1,610 a month on their mortgage.

But at today's rate, the same buyer would instead pay $2,553 per month.

In a normal market, such high rates would have instantly poured cold water on house prices.

However, a new report by property portal Redfin shows the median US house sale price has increased 5 percent to $380,250 compared to last year. 

The trend is being driven by a lack of housing supply which is keeping prices artificially high. 

It means homebuyers face one of the least affordable markets in recent memory. 

Redfin reports the combination of high mortgage rates and prices has brought the median homebuyer's monthly housing payments to $2,775, up 11 percent compared to last year. 

The findings come amidst uncertainty over when the Fed will begin cutting interest rates.

Its benchmark funds rate is currently sitting between 5.25 and 5.5 percent - its highest level since 2001. 

Economists had predicted four rate cuts in 2024 which would in turn bring down mortgage rates. 

However, stubborn inflation data - which showed prices rose 3.5 percent in the year to March - has quashed expectations rates will come down quickly.

The Fed has repeatedly signaled it will not slash rates until the rate of annual inflation comes in-line with its 2 percent target.