B4 • Friday, August 18, 2023
THE GARDEN ISLAND
thegardenisland.com
MORTGAGE RATE CLIMBS TO 7.09 PERCENT Rates at highest level in more than 20 years Alex Veiga and Matt Ott ASSOCIATED PRESS The average long-term U.S. mortgage rate climbed this week to its highest level in more than 20 years, grim news for would-be homebuyers already challenged by a housing market that remains competitive due to a dearth of homes for sale. Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan rose to 7.09 percent from 6.96 percent last week. A year ago, the rate averaged 5.13 percent. It’s the fourth consecutive weekly increase for the average rate and the highest since early April 2002, when it averaged 7.13 percent. The last time the average rate was above 7 percent was last November, when it stood at 7.08 percent. High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already unaffordable to many Americans. “With prices even higher than they were a year ago in many markets, crossing the 7 percent mortgage rate threshold again could
High inflation drove the Federal Reserve to raise its benchmark interest rate 11 times since March 2022, lifting the fed funds rate to the highest level in 22 years. Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates can influence rates on home loans. The average rate on a 30year mortgage remains more than double what it was two years ago, when it was just 2.86 percent. Those ultra-low rates spurred a wave of home sales and refinancing. The sharply higher rates now are contributing to a dearth of available homes, as homeowners who locked in those lower borrowing costs two years ago are now reluctant to sell and jump into a higher rate on a new property. GENE J. PUSKAR / ASSOCIATED PRESS FILE The lack of housing supTownhomes under construction are shown in Mars, Pa., on May, 27, 2022. ply is also a big reason home sales are down 23 more reports showing the and climbing. The yield, be what sets in motion a and the 10-year Treasury percent through the first which lenders use to price U.S. economy remains remajor contraction in the yield has moved up, caushalf of this year. rates on mortgages and housing market this fall,” The average rate on 15markably resilient, which ing mortgage rates to other loans, touched its said Lisa Sturtevant, chief year fixed-rate mortgages, could keep upward presclimb,” said Sam Khater, highest level since October sure on inflation, giving the Freddie Mac’s chief econo- popular with those refieconomist for Bright MLS. on Thursday morning, and Federal Reserve reason to The latest increase in mist. “Demand has been nancing their homes, rose rates follows a sharp uptick it’s close to where it was in keep interest rates higher impacted by affordability to 6.46 percent from 6.34 2007. in the 10-year Treasury for longer. headwinds, but low invenpercent last week. A year The yield has been rising yield, which has been “The economy continues tory remains the root cause ago, it averaged 4.55 perabove 4 percent this month as bond traders react to to do better than expected of stalling home sales.” cent, Freddie Mac said.
Warren Buffett’s firm invests in the biggest homebuilders Josh Funk ASSOCIATED PRESS OMAHA, Neb. — Warren Buffett’s company appears to be betting on the housing market picking up because Berkshire Hathaway bought more than $700 million worth of homebuilder DR Horton’s stock this spring along with smaller stakes in fellow builders Lennar Corp. and NVR Corp. Berkshire revealed those new investments Monday in a quarterly filing with the Securities and Exchange Commission that shows the conglomerate’s holdings as of the end of June. Investors always watch Berkshire’s moves closely because of Buffett’s remarkably successful track record over the years, but these filings don’t make clear which moves Buffett made and which ones were handled by one of the Omaha, Nebraska-based company’s two other investment managers. Buffett typically handles all the biggest investments in the $350 billion portfolio worth $1 billion or more. The three homebuilder stakes together are worth around $800 million. Berkshire holds nearly 6 million DR Horton shares, 152,572 Lennar shares and 11,112 NVR shares. Buffett’s company made a number of other tweaks to its portfolio during the second quarter including reducing the size of its General Motors and Globe Life stakes while adding to its Capital One investment. Berkshire almost halved its GM stake from 40 million shares to 22 million. And it reduced its Globe Life investment to 2.5 million shares from the previous quarter’s nearly 6.4 million. Berkshire Hathaway now owns nearly 12.5 million Capital One shares, up from 9.9 million in March. Buffett’s company also eliminated smaller investments in Marsh & McClennan, McKesson Corp. and Vitesse Energy. Berkshire’s biggest holdings in Apple and Bank of America stock remained unchanged.
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