Tag: buying

Repairing a CVT transmission failure on a Toyota C-HR – MoneySense
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1. The owner of a 2018 C-HR that experienced a failure at just over 100,000 kilometres and five years received an estimate of $10,000 to replace the transmission with a new one. After he complained, the repair cost was reduced to $4,000, with Toyota Canada and the dealer making up the difference.
2. Toyota Canada rejected a claim for a transmission failure at 138,000 kilometres on a 2019 C-HR; the Montreal-area dealer estimated the repair at slightly over $10,000.
An alternative to replacing the transmission: A less expensive repair

If no help is forthcoming, an alternative may be to find a used transmission from a wrecked C-HR and have it installed, for a final price in the range of $4,000 to $5,000. The risk: a replacement used transmission may well develop the same defect as your original transmission over time—that’s a risky bet if you intend to hang on to your C-HR for many more years.

A third way to fix a CH-R transmission

I checked with Alain Groulx, a transmission expert who has helped many members of the APA resolve transmission failures. Here’s his take on the transmission failure in your C-HR:

“Based on the information provided, it seems to be an issue with defective bearings inside the transmission. It’s a shame that dealers are recommending replacing the entire transmission at the customer’s expense instead of trying to repair it. By replacing a complete transmission, the warranty is carried by the manufacturer, so there is less risk for the dealer, but it comes at a heavy price to the customer.

“A good transmission rebuilder may be able to open and repair the transmission. We had similar issues with the Jeep Patriot that used a CVT transmission on some models. The differential carrier bearings experienced many failures at low mileages; we were able to source and replace the bearings at a fraction of the cost of a new transmission.

“If this is a recurring problem, Toyota could make a bearing set available as a recommended repair kit. That has the potential to drop the repair price to about $3,000, if the problem is picked up early before a complete bearing failure ruins other components inside the transmission. Sometimes bearings are available from independent suppliers like General Bearing Service (GBS) or similar suppliers. In order to know if they are available in the aftermarket, the transmission would have to be dismantled to get the part number on the defective bearing. In many cases, the bearing is made exclusively for the manufacturer and is not available unless the automaker offers it as a replacement part independently of a complete transmission.”

“Broken telephone” effect: Documenting your transmission failure complaint to prepare a claim

Information sometimes gets lost in translation when a customer reports a problem. In your case, a suggestion to check for “a whine from the engine” may have been enough to throw the technician off the trail. Or the road test conducted during the warranty period was not done at sufficient speed or for enough time to elicit the noise you were hearing.

Here are some steps you can take during the warranty period to improve the odds that issues with your vehicle will be addressed and avoid the “broken telephone” effect:
1. Ensure your concerns are recorded accurately. Focus on symptoms over solutions, unless you are already familiar with the problem and its repair.
2. If possible, identify a location on the vehicle to check more carefully, the speed, road conditions, warm/cold engine and other factors that appear relevant.
3. Use your cellphone to capture intermittent problems that magically seem to disappear when you take your vehicle in for service. For example, record abnormal sounds that come and go, and take photos of warning lights that come on temporarily.
4. Obtain copies of repair orders, even for no-charge inspections, and retain them.
In my experience, helping consumers with resolving complaints, you can go back about a year relatively successfully for a problem that was reported during the warranty period but wasn’t addressed. To do that, having complete service records will improve your chances of a favourable outcome significantly.

Making your case if your claim is rejected

A transmission, which is a lifetime component of a vehicle, should last for much more than six years or 110,000 kilometres, as long as it’s maintained and isn’t abused. Almost all the automakers that introduced CVT transmissions eventually extended the warranties on some of them past the original “five-year, 100,000-km” powertrain warranty to address durability concerns.

If Toyota Canada isn’t forthcoming with assistance, Ontario lawyer Michael Turk says you could sue the manufacturer, basing your claim on the implied warranty of fitness under the province’s Sale of Goods Act:

You will need to obtain an expert report from a third party, typically a mechanic or transmission expert who will be able to confirm that the bearing is the cause of the failure, and that the failure occurred as a result of a manufacturer’s defect in the transmission. With the expert’s report in hand, your next step is to file a claim in the Small Claims Court for the cost of repair and any additional costs you have incurred as a result of the loss of use of the vehicle arising form the transmission failure. You could also argue that the vehicle exhibited problems with the transmission while it was still under the manufacturer’s original warranty and this was brought to the attention of the dealer at the 88,000-kilometre service while still under warranty. Lastly, when choosing an expert, it is important for the expert to be able to be qualified by the Court as an expert and that your expert is willing to come to court and testify on your behalf. This process has become easier and less disruptive to those who provide expert evidence as the courts have transitioned to a virtual format.

Given that the complaints received to date are serious, I invite other Toyota C-HR owners with an experience to share about their vehicle’s transmission to contact the APA. This will help the association identify a pattern of failures and determine what actions Toyota Canada is taking to address complaints.
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October 23, 2023
Home buyers flee the housing market as mortgage rates surge to the highest level since 2000

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The numbers: Mortgage rates rose for the fourth week in a row to the highest level since 2000, as the economy continues to show strength.

Rates surged as the U.S. economy continued to show signs of resilience, which signal to the market that the U.S. Federal Reserve may not be done with rate increases.

The 30-year was averaging at 7.31%, which in part dampened demand for home-purchase mortgages to the lowest level since April 1995.

Demand for both purchases and refinancing fell. That overall pushed down the market composite index, a measure of mortgage application volume, the Mortgage Bankers Association (M.B.A.) said on Wednesday.

The market index fell 4.2% to 184.8 for the week that ended Aug. 18, relative to a week earlier. A year ago, the index stood at 270.1.

Key details: High mortgage rates are weighing on home buyers’ budgets due to an increase in borrowing costs. Many buyers fled the market as a result of rates rising over the last week. The purchase index, which measures mortgage applications for the purchase of a home, fell 5% from last week.

Rates hold little allure for homeowners hoping to refinance. The refinance index fell 2.8%.

Rates rose across the board.

The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 7.31% for the week ending August 18. That’s up from 7.16% the week before, the M.B.A. said. The 30-year is at the highest level since December 2000.

The rate for jumbo loans, or the 30-year mortgage for homes sold for over $726,200, was 7.27%, up from 7.11% the previous week.

The average rate for a 30-year mortgage backed by the Federal Housing Administration rose to 7.09% from 6.93%.

The 15-year rose to 6.72%, up from last week’s 6.57%.

The rate for adjustable-rate mortgages rose to 6.5% from last week’s 6.2%. The share of adjustable-rate mortgages rose to 7.6%, the highest level in five months.

The big picture: The housing market continues to be hammered by good economic news, which is pushing rates up and depressing home sales. Higher rates also discourage homeowners from selling, as their purchasing power erodes when they look for homes to buy.

As a result, both home-buying demand and supply of home listings continues to fall, bringing the market to a standstill. Until the economy shows signs of slowing, it’s likely that the housing market will remain in the doldrums.

What the M.B.A. said: “Applications for home purchase mortgages dropped to their lowest level since April 1995, as home buyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power,” Joel Kan, deputy chief economist and vice president at the M.B.A., said in a statement.

Kan added that there was an uptick in people using adjustable-rate mortgages. “Some home buyers are looking to lower their monthly payments by accepting some interest rate risk after the initial fixed period,” he said.

Market reaction: The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was above 4.3% in early morning trading Wednesday.

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August 23, 2023
Buying a Home Is Getting Out of Reach. Those 7% Mortgage Rates Are the Reason Why.

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Buying a Home Is Getting Out of Reach. How Much 7% Mortgage Rates Need to Fall.

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August 19, 2023
‘There’s nothing in the data that shows prices crash’: America’s housing market is showing remarkable resilience

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The housing market may feel out of whack to home buyers coping with fast-rising home prices and 7% mortgage rates. But like it or not, the housing market is in the pink of health.

Several economic indicators that measure housing activity — from home prices to sentiment surveys — show that home builders and sellers (the few that are out there) are finding strong demand from home buyers.

News of the housing market’s relative health may be welcome to some — like real-estate agents and investors — but it’s becoming a concern for economists. The more buoyant the housing market, economists say, the more likely the U.S. Federal Reserve will unveil another interest-rate hike, which further heightens the risk of a recession.

“‘The housing market has started to recover, and this is a problem for the Fed because more demand for housing will boost home prices and rents.’”

— Torsten Slok, chief economist at Apollo

“The housing market has started to recover, and this is a problem for the Fed because more demand for housing will boost home prices and rents,” Torsten Slok, chief economist at Apollo, wrote in a note in May. And housing is a big part of how the government measures inflation, he added. This will make it more difficult to reduce inflation from 5% to the Fed’s 2% inflation target, he said.

If the Fed launches another rate hike, it would push mortgage rates, which are already in the 7% range, to go even higher.

“The housing market is in a very — if fragile — recovery,” Mike Simonsen, founder and president of real-estate analytics firm Altos Research, told MarketWatch.

“There appears to be more demand than available supply for homes, especially in the real-estate market,” he explained, which is keeping home prices high, but that doesn’t mean demand could evaporate if the current situation changes. Recall when rates doubled from pandemic-era lows in 2021 to 7% last year, which zapped home-buying momentum.

House hunters have adjusted their expectations. But if rates were to jump from 7% today to even higher levels, “I would not be at all surprised if homebuyers stopped abruptly again,” Simonsen said, stating his thesis for the fragility of the sector. Americans broadly expect rates to go over 8%, according to a March survey by the New York Federal Reserve.

MarketWatch looked at three housing-market indicators — and the picture looks rosier than ever:

Active listings are down — blame interest rates

Redfin’s deputy chief economist, Taylor Marr, said his go-to indicator was active listings.

Active listings are down this spring, compared to the previous year, according to the company’s data. At the end of June, the number of homes listed for sale on the market was down 8.1% over the prior year.

“It really captures that supply is pulling back significantly relative to demand,” Marr said.

About 14 million mortgages were refinanced during the COVID-19 pandemic. Few homeowners find it in their interest to sell their home and give up an ultra-low mortgage rate they secured during that time. Selling a home in July 2023, and purchasing a new one may entail taking a mortgage rate in the 7% range.

Redfin data says that active listings of homes are down.

As a result, the housing market is seeing an excess of demand and not enough supply, which has led to a resurgence of bidding wars in some parts of the U.S.

While this metric is showing signs of the housing market returning to life and heating up amid a shortage of houses for sale, Marr said he’s not yet ready to call it a recovery. “It’s hard to declare completely the bottom of the housing market,” he said.

Still battle-scarred by the housing crash of the Great Recession, Marr said economists “might be hesitant” to say that the housing market is in recovery mode. “We still have a lot of uncertainty with the economy ahead,” he added. “If the economy really takes a turn three or four months from now for whatever reason, it could certainly bring the housing market back lower than it was even last November,” he added.

The price gap between new and existing homes

With a major shortage of resale homes, new-home sales have been taking off.

Home builders, understandably, are thrilled about the inventory shortage.

The National Association of Home Builders measures builders’ sentiment in a monthly index, and that indicator has been very cheery of late. In June, the index turned positive for the first time in nearly a year. Builders were scaling back price reductions; they were happy about current sales conditions as well as sales over the next six months, the NAHB said.

“A bottom is forming for single-family home building as builder sentiment continues to gradually rise from the beginning of the year,” said Rob Dietz, chief economist of the NAHB.

One of the major U.S. home builders, Lennar, also offered some commentary on its second-quarter earnings call last month. The company’s executive chairman, Stuart Miller, said that “the market and the economy will remain constructive for home builders as pent-up demand continues to come to market and consume affordable offerings.”

Miller also doesn’t expect the supply issue to be fixed anytime soon: “We believe that the supply constraint will continue to limit available inventory and maintain supply-demand balance,” he said on the call. “The core elements of the supply shortage will not resolve in the near term as the almost 15-year production deficit will take years to resolve.”

Home-builder confidence, as a result, is signaling high optimism about the future of the housing market, and a return to normalcy.

As a result, housing starts have spiked as builders scramble to meet the demand.

Builders have ramped up building new single-family and multi-family homes.

Ali Wolf, chief economist at Zonda, looks at how prices of new homes trend relative to resale homes as a key indicator of the health of the housing market. Her conclusion? Housing industry professionals involved in the construction and sale of new homes are out of a recession, given the robust demand.

In fact, demand has been so strong that new homes — generally considered to be more expensive than resales — have become more affordable in home buyers’ eyes given the competition in the existing home space.

Typically, new homes are 20% more expensive than resales, Wolf said. And today? That spread has fallen to 4%.

So what’s going on? Builders are not necessarily slashing prices. Instead, existing home prices have risen as homeowners are reluctant to sell.

That’s a good deal for buyers. New homes, Wolf said, are traditionally considered a “luxury good.” They’re brand new, and buyers can often customize them. They also require less maintenance than older homes.

Sellers are holding out on cutting prices

Simonsen, who leads Altos Research, said price cuts were his go-to indicator to gauge the health of the real-estate market. Specifically, price cuts formed a proxy for demand, he explained.

“When the houses are on the market, if there are no buyers for the current houses that are listed, people start taking price cuts,” Simonsen said.

And to be clear, price cuts jumped last year, when rates jumped, he added.

But that dynamic has since changed, as seen in the chart below. “There are currently fewer price reductions now than in 2018 or 2019,” Simonsen said.

Data from Redfin says that homeowners aren’t cutting prices on their homes when selling, possibly due to strong interest from buyers.

And for those of you holding out for home prices to crash? Keep waiting, Simonsen said.

“There’s nothing in the data that shows prices crash,” he said. Even if a recession hits at the end of the year, which results in more job layoffs, demand for home-buying falling, and an increase in foreclosures and distress, that’s still a few years from now, he added.

“There’s no signal of home prices crashing anywhere,” Simonsen added.

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July 11, 2023
I ruined my family’s finances by withdrawing from my 401(k) to buy a house – I regret it

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I recently made a panic decision to withdraw all my money from one retirement account and I am now closing on a house in February (about $200,000). I am 36 years old, married and have a 1-year-old. Half of me is regretting it, and I’m worried about next year’s taxes due to the withdrawal and the 10% penalty I paid.

I have been saving up money with my family in order to buy our first home. Recently, however, interest rates have risen, making me worry that this window to get an affordable house was closing. In a fit of panic, I withdrew all of our $26,000 saved money from my 401(k), putting it in a high-yield savings account (3.75%). We have now chosen a home and will be using around $18,000 of this money for the down payment.

I am now worried that I might have to pay income taxes and a penalty for the withdrawal itself. I am extremely anxious over this situation as I feel I have destroyed our family’s financial future and that we cannot afford to pay taxes on the money I withdrew.

My main concern or question is, is there a way to tell the IRS that this money is being used toward a house? Retroactively?

See: I’m a single dad maxing out my retirement accounts and earning $100,000 – how do I make the most of my retirement dollars?

Dear reader,

The first thing you need to do: Take a breath. Most decisions should not be made in a panic, especially when involving money.

Because you withdrew from your 401(k), yes, you will have to pay taxes and a penalty. Had it been a loan, you’d have to pay interest on what you borrowed, but it would be to your own account. Keep in mind however that loans from your employer-based retirement plans are also risky – if you were to separate from your job, for whatever reason, you’d be responsible to pay it back or it would be treated as a distribution.

I understand your sense of urgency in wanting to buy a home during a more favorable market, but your time now should be spent on getting yourself financially situated and saving for the future.

“I wouldn’t advise this or done it this way, but he’s not stuck and it’s not detrimental – it’s just a tough lesson to learn,” said Jordan Benold, a certified financial planner at Benold Financial Planning.

Get very serious about your current finances and find a way to earmark a portion of your income to savings if at all possible. There are a few things you should be doing.

First, assess how much you will be paying in taxes and penalties. I’m not sure what your tax bracket is, but did this distribution push you into a higher tax bracket? You can use a calculator or talk to an accountant to see what that withdrawal will incur in taxes – then make sure you can pay it, or talk to the Internal Revenue Service about an extension. There are penalties for failing to file your taxes or pay them, and you don’t want to add that on top of your stress.

Also see: We have 25 years until retirement and are saving 25% of our income – are we doing it right? And are we saving too much?

The IRS may not be able to do anything for you in terms of waiving those penalties – though it doesn’t hurt to ask, even if you have to wait on the phone for a while to talk to someone – but communication and attention to detail are key when it comes to your taxes. Getting an IRS agent on the phone and talking through your situation won’t be time wasted. There are so many rules, and an agent can help make sense of your options.

Read: The days of IRS forgiveness for RMD mistakes may soon be over

Once you get that sorted, look extremely carefully at whatever money you have coming in and what’s going out. You’re about to close on a home, and that costs money – not just the home itself, but all of the extras associated with closing. You may also need money for insurance, furniture, any repairs and so on if you haven’t factored that in yet, so fit that into your budget for when you sign the papers. Beyond that, list every expense you expect to have for the next 12 months – home insurance and taxes, a mortgage or utilities, groceries, medicine, any other nonnegotiable costs and add it all up. Don’t forget anything – ask your partner if there’s anything you may have forgotten.

Then compare it to your income. Are you under? Are you over? What changes can you make without totally draining your happiness? I always advocate for a balance…yes, in some cases you have to omit a few expenses for the time being when building up an emergency savings account or paying down debt, but don’t completely rob yourself of joy or all of your hard work may backfire. If you really need to buckle down, make a separate list of activities and entertainment you can get for free (or as close to free as possible)—walks in the park or on the beach with your partner and child, museums on free days, pot lucks and at-home movie nights with family and friends and so on.

Want more actionable tips for your retirement savings journey? Read MarketWatch’s “Retirement Hacks” column

Earmark a portion of your income to replenish your retirement savings before you try saving for any other goals. (This is separate from an emergency savings account, however – you should have one of those.) You may do that with payroll deductions in your 401(k), or also by allocating some of your savings to an IRA outside of the 401(k).

Take some time to learn the rules of your retirement plans. For example, an IRA allows an investor to take $10,000 out of the account penalty-free if it’s for a first-time home purchase (whereas a 401(k) does not have that exception). It may be too late for that, but there are other perks with various retirement accounts.

The 401(k) has a higher contribution limit and also comes with the possibility of employer matches (if your company offers it), whereas an IRA allows for penalty-free withdrawals for college. With a traditional IRA, you’d have to pay taxes on the withdrawal, whereas with a Roth IRA you’ve already paid the taxes and won’t have to pay any more for withdrawing from your contributions (you may have to pay taxes on the earnings portion, so follow distribution rules closely).

Remember – you don’t want to make distributions from your retirement savings for just anything. You can borrow money for a home or college, but you can’t borrow money for retirement, so it’s important to protect those accounts. Familiarize yourself with the pros and cons of all accounts so that you can maximize your savings and diversify your withdrawal options when you finally get to retirement.

So just buckle down, get yourself in order and think of the future. “He’s got plenty of time – 30 to 40 years to work,” Benold said. “This might be a distant memory that he hopes he can forget.”

Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

Readers: Do you have suggestions for this reader? Add them in the comments below.

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January 17, 2023
BEST OF 2022: Melany Of MList: Effective ways to save on food expenses

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Food has gone up a lot in overall price these last few months, which have hit our wallets hard. But there are ways that you can cut your food expenses down a bit, and here’s how:

Buy whatever is in season, and avoid “exotic” items. Look for the items that are in season right now. That may have been tricky during the winter months (I mean, how many root vegetables can you really eat in a week?!), but try and stick to what’s in season, buy in bulk, and freeze or preserve the leftovers.

Make a list… and stick to it. There’s nothing worse than aimlessly wandering around the grocery store, throwing things haphazardly in your cart. Impulse buying will add to your bill, so create a quick list and only buy the things listed there.

Take advantage of savings. That means checking flyers. Know the prices of foods so you can really decipher between deals and non-deals. And, of course, use your MList Card – we have a whole section of food vendors who offer great discounts on groceries, restaurant purchases, and more.

Take advantage of technology. flipp is a cool app where it sends you your flyers digitally through a mobile device. You can even put in your grocery list and it will tell you what’s on special and at what grocery stores.

What can you prepare at home? Sure, that Starbucks coffee is amazing every morning, but those purchases can quickly add up. Invest in an awesome travel mug and start making your brew at home.

Melany xx

Married with three kids, MList’s Melany is a jack-of-all-trades. Not only is she a hardworking mom but she’s a serial saver (she loves her MList Card!), she loves to cook, she is very spiritual, and she is very organized. She is also chronically busy. Get her take on what to see, do and buy in Montreal and beyond.

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December 27, 2022
Melany Of MList: Start your holiday shopping now – you won’t regret it

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The holidays are undoubtedly going to be different this year, and that means holiday shopping will change too. One thing I’m trying to take from this pandemic is figuring out what’s truly important. As we slowly move into the holiday season, let’s remember that these times are not only about materialism and things but also about being grateful for what you have and spending time with those we love, whether it be within our household bubble or virtually.

So, leave the retail stress behind this year and get a headstart on your holiday shopping now! Without the usual holiday rush, you’ll be able to slow down and really enjoy the laid-back attitude of this year’s celebrations. Start your holiday shopping now – you won’t regret it. If you do, you can:

– Save money. There may be a lot of advertised sales in the weeks leading up to the holidays, but you can still find deals right now. Be sure to keep an eye out for sales and specials around American Thanksgiving too.

– Find more selection. Stock is going to run low pretty quickly this year, and by buying sooner than later, you’ll be able to get your hands on all those most-requested must-have gifts.

– Find something from the heart. It’s hard to find a useful, thoughtful present when you leave your shopping till the last-minute. If you begin your hunt for the perfect gifts now, you’ll allow yourself some extra time to really put consideration into your choices.

– It can lead to getting other to-do’s out of the way. Once you have your shopping done, you can get a headstart on other projects, like wrapping, writing out cards, baking, and more.

– You’ll have your sanity. Do you find you’re always frazzled in the month of December (like I am)? With present-buying out of the way, you can focus on more important things: you.

Married with three kids, MList’s Melany is a jack-of-all-trades. Not only is she a hardworking mom but she’s a serial saver (she loves her MList Card!), she loves to cook, she is very spiritual, and she is very organized. She is also chronically busy. Get her take on what to see, do and buy in Montreal and beyond.

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November 22, 2022
Housing starts fall again as high mortgage rates scare off U.S. home buyers

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The numbers: Construction on new houses fell 4.2% in October as high mortgage rates put off buyers and forced builders to scale back, a situation that’s likely to continue through 2023.

U.S. housing starts slowed to an annual pace of 1.43 million last month from 1.49 million in September. That figure reflects how many homes would be built in 2022 if construction took place at same rate over the entire year as it did in October.

Economists polled by MarketWatch had expected housing starts to register a rate of 1.41 million after adjusting for the typical seasonal swings in demand.

New construction hit a record 1.8 million in April before tapering off.

The number of permits, meanwhile, slipped 2.4% to a rate of 1.53 million, down sharply from a record 1.9 million last December.

Permits foreshadow how many houses are likely to be built in the months ahead, assuming a stable real estate market. But a major increase in mortgage rates this year has depressed demand and forced builders to scale back plans.

Key details: Single-family home construction fell 6.1% to an annual rate of 855,000 in October. Projects with five units or more registered a 556,000 rate, little changed from the prior month.

Housing starts are down 9% from a year ago, when mortgage rates briefly dipped below 3%.

Permits have fallen 10% from a year earlier.

Big picture: The highest mortgage rates in several decades have stifled new construction and are likely to do so through the next year or longer. The rate on a 30-year fixed mortgage recently topped 7%, more than double the rate a year ago.

While the U.S. has an acute need for more housing, fewer people can now afford to buy a home. Home prices are starting to come off record highs, but not by much.

Looking ahead: “Higher mortgage rates continue to exact a heavy toll on new construction,” said Richard Moody, chief economist of Regions Financial.

Market reaction: The Dow Jones Industrial Average
DJIA,
-0.18%
and S&P 500
SPX,
-1.01%
fell in Thursday trades.

Also read: The median income needed to buy a typical home is over $88,000 — $40,000 more than before the pandemic

Related: Home prices will fall in 2023, but affordability will be at its worst since 1985, research firm says

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November 17, 2022
Mortgage rates march towards 7%, reaching highest level since 2007

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The numbers: Mortgage rates continue to march towards 7%, continuing to pressure potential homeowners looking to buy a home.

The 30-year fixed-rate mortgage averaged 6.7% as of Sept. 29, according to data released by Freddie Mac
FMCC,
+0.75%
on Thursday.

Mortgage rates are up as the Federal Reserve pushed key interest rates up to deal with the worst inflation the country has seen in 40 years.

That’s up 41 basis points from the previous week — one basis point is equal to one hundredth of a percentage point, or 1% of 1%.

The rise in rates is bad news for prospective buyers, as it potentially adds hundreds of dollars to their mortgage payments.

Mortgage rates are now at highs last seen since mid-2007. To put the latest rate in perspective: A year ago, the 30-year was at 3.01%.

“Mortgage rates are now at highs last seen since mid-2007. To put the latest rate in perspective: A year ago, the 30-year was at 3.01%.”

Bloomberg’s chief economist Michael McDonough said a $2,500 monthly mortgage payment — with 20% down — would have gotten a buyer a $758,000 home last year.

This year? You’d get a lot less house — with $2,500 per month, you’d only be able to afford a $476,000 home, he wrote on Twitter
TWTR,
-1.12%.

The median price of an existing home in the U.S. was $389,500 in August, down from $403,800 the previous month, the National Association of Realtors said.

The average rate on the 15-year mortgage also rose over the past week to 5.96%. The adjustable-rate mortgage averaged 5.3%, up from the prior week.

“The uncertainty and volatility in financial markets is heavily impacting mortgage rates,” Sam Khater, chief economist at Freddie Mac, said in a statement.

Khater added that Freddie Mac’s survey of lenders revealed a large dispersion in rates, so home buyers should shop around with lenders to find a good quote.

Mortgage applications also fell in the latest week, as cautious buyers continue to pull back as rates march towards 7%.

The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.784%
rose slightly above 3.8% in morning trading on Thursday.

Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com

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September 29, 2022