Housing: 30-year mortgage rates march toward 6%

Yahoo Finance's Ronda Lee reports on housing affordability as the average 30-year mortgage rate reaches 5.81%.

Video transcript

SEANA SMITH: Mortgage rates continuing their march higher, as the Fed raises rates. Ronda Lee is here with the details. And Ronda, as mortgage rates rise, more and more people are being priced out of the buying market.

RONDA LEE: So many people have already been priced out of the market, particularly at the beginning of this year. So at the beginning of this year, rates were in the mid 3's. At the end of May, rates were 5.1. Today, 5.81. And everyone's just knowing we're going to march towards 6%. It's going to go over that. So, many of the people in the market have already been priced out.

I think the thing that people need to remember is that this wasn't a normal market. The rates were-- the pandemic caused the low rates. And because of that, people had a boom from that. But this was never meant to last. As one economist said, this was an abnormal housing market. So now we're going back to 6% rates. That's kind of like we're getting close to where it was before.

So it's the problem is that we have inflation. And even though income has risen, not so much to catch up. So we have this affordability issue. And that's where we were talking about the possibility of maybe 40-year mortgages. So that is something where it's like, well, are you going to pay rent that increases every year, or am I going to get this monthly mortgage payment, even though my equity might not be the same?

So what we're looking at right now is, as another economist said, we're going into, like, a housing hibernation. Sellers have to become more realistic. The ones that weren't in the market a year ago or even six months ago, you're not going to get what you could have gotten. So the ones who are currently putting their things on the market, they need to be very realistic about their rate, their price, and what they're asking for because you're not getting 20, 30 people showing up.

DAVE BRIGGS: Damned if you do, damned if you don't. I mean, you sit this one out, while prices come down, mortgage rates come right back up and compensate for that price going down. A piece today about Atlanta, people being forced into long-term hotel stays because they can't afford the housing market in Atlanta. It is a tough story--