WEST PALM BEACH, Fla. — Buying a home is costing a lot more these days as mortgage rates have hit a 22-year high.
The rate on a 30-year fixed mortgage, the most common, is now flirting with 7%, and there's talk it could rise more.
This is potentially threatening to slow down South Florida's housing market.
"Not only does the house cost more, but the financing of the house costs more," Bankrate economist Greg McBride said.
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The rise of rates from 2002, McBride said, has stripped 35% of the buying power for those looking for a home.
"Month over month, year over year new mortgage applications are down," Ken H. Johnson, an economist at Florida Atlantic University's College of Business, said. "Refinance applications are down."
Johnson said high rates not seen in more than 20 years can't help but put a chill into South Florida home buyers.
"I've never seen this phenomenon before where people say, 'I'm fine where I am because I'm not moving because I don't want to give up my super great low rate mortgage," Johnson said.
Johnson said the high rates also have the potential to keep buyers on the sidelines when trying to navigate inflated home prices and now rates that will only drive up monthly payments.
McBride said much of this is tied to inflation and rate hikes from the Federal Reserve, which is trying to slow rising prices.
"If inflation comes down in a meaningful way, and there's a prospect of reduced interest rates down the road, that's the type of impetus that we could see bringing mortgage rates down," McBride said. "I just don't expect that on the near-term horizon."
Adjustable-rate mortgages, not as popular, can offer lower introductory rates. But experts warn that homeowners' monthly payments could shoot up if rates keep trending up in the near future.