Mortgage rates surge to highest level since July | ChicagoLIVE

Added: 2026-05-22

[00:00:00]Let's talk about the mortgage rates. We know a lot of people, you know, spring and the summertime months are are when a lot of people start doing their their home shopping, kind of getting out there, maybe testing the waters to see what you can afford or what even is on the market. We have Steven Cates, Bankrate financial analyst, who's here with us now as we're you know, still kind of maybe a lot of people would be hesitant with the implications of the Iran war when it comes to mortgage rates. Thank you so much for being here with us.

[00:00:31]My pleasure.

[00:00:32]So, as of this week, we're seeing that the average rate on the 30-year fixed loan rose seven basis points.

[00:00:41]Talk a little bit more about that.

[00:00:43]That's not the direction we'd like to go.

[00:00:45]It's not the direction we like to go. I think what what people may respond to is that we're we're seeing 30-year mortgage rates at 6.6% on average.

[00:00:54]That is at the same rate, the highest since August of last year. So, we have done a tremendous you know, sort of round trip here going from the last 6-7 months, you know, mortgage rates that really haven't budged in in quite a while. We got as low as just under 6% in February.

[00:01:18]And we've moved up and down a little bit, but ultimately this has been a direction just up.

[00:01:24]And that's putting a damper on an already very weak spring housing market.

[00:01:28]Yeah, and that's what I was going to ask you next. I mean, when people hear percentage rates, let's say someone is a first-time home buyer, okay? And they're just seeing 6.75.

[00:01:43]What does that actually mean to them?

[00:01:48]Well, what it means is that, you know, the the house that they are going to buy, you know, they have to evaluate what that carrying cost of the mortgage is going to be. Uh, so, not just a down payment. We know that home prices have risen. In some cases, they've risen as high as 30 or 50% compared to what they were at the beginning of 2020.

[00:02:07]Uh, and we're seeing very different environments across the country in terms of the housing markets. We're back to a real estate market that is very hyper local. What you see in Florida is different than Texas, California, uh, Illinois, Massachusetts. They are deviating uh, in a way that they haven't been only a few years ago. But, for people to actually go and buy, yes, maybe you have the down payment for that. But, can you afford to pay that monthly payment? And that's rising. What this means is that, you know, payments, uh, comparing 6% to 6.6%, you're looking at potentially a couple hundred dollars extra per month. So, that's maybe $2,000, almost $2,500 per year that you might be paying more than you would have been only a few months ago. That might break people's budgets. That might mean that they have to look at less expensive homes.

[00:03:01]Uh, or they have to delay and wait until we see lower rates. It's really a circumstance where, you know, for people coming into 2026 thinking this is their moment, we have rates that are now much lower, almost a full percent lower than they were last year, we've retraced to the point where we barely have lower rates than we did last year. Mhm.

[00:03:23]So, if someone were saying, "Do I jump in and figure it out? Do I wait on the sidelines and see if it goes back in the opposite direction?" What what are your thoughts?

[00:03:35]Well, most people are sitting on the sidelines. Buyers are really not making much of an effort to to come out and see a lot of the a lot of the homes that are for sale. And I think part of that is because sellers have not yet recognized, or because of the home equity they have, don't need to recognize, that the prices that they remember from 2022 and 2023, those peak prices, when things were still hot, those aren't the prices you can you can sell a home for today.

[00:04:01]If you want to sell your home, you got to price it to move. And that's going to be for many sellers a lot lower than what they think it could be worth or they remember it was worth only a couple of years ago. So, buyers are sitting on the sidelines, but my advice is always you should buy when you know you can afford it. If you find a home that you love and it makes sense financially, waiting for a better rate might mean that you could lose that home or you're going to be looking for a lot longer.

[00:04:29]So, if you find a home that you can afford and it's one that works for you, there's no reason to wait.

[00:04:35]If you're not there yet, doing everything you can to improve your credit score and your eligibility for a mortgage is going to do more to help you lower your mortgage rate than waiting around for the market to do the work for you. That is a really good perspective on that. And in that vein, what are some of the things that people should do? A credit score, you know, the what what are some of the things if you're trying to put together your best package, your best self to present, um, when the time is right, what are more of the things that that people should be doing while they wait?

[00:05:08]The very basics are starting to get all your documentation together. So, be organized. You know, if you don't know or if you don't have, you know, recent statements for your bank, for income, for, you know, an understanding of what your your financial situation is, figure that out because the bank is going to ask about it. You know, if you have lingering credit card debt or other debts, can you clean that up before you want to go and apply for a mortgage? Can you get your credit score, you know, improved in some way through, you know, more payments that are consistent. But, figure out whatever those those weak points are. Do Do have too little credit? Could you lower the utilization rate on a monthly basis? Are you using too much of available credit?

[00:05:52]And could you be a little bit more diligent with how you manage those things? Whatever that's going to be, do that now. Do that before you want to apply. You don't want to be sitting on a bank website waiting to apply and wondering, "Well, is my credit ready?"

[00:06:07]You should have known that and thought about that months ahead of time. So, for people who are sitting on the sidelines waiting for a moment, waiting for a position where they feel like, "Okay, rates are are are right for me and I'm ready to jump in."

[00:06:20]Uh the best way you can prepare for that and to get that good rate when you want it is to get your credit and your eligibility in order, be organized, uh be prepared to put together a really quality lending application file, uh and that's going to make your life a lot easier. Excellent advice. I'm only going to add don't hop in with these Memorial Day uh weekend prices for cars and say, "Well, I don't know if I can get a house, but let me get a car right now." A major purchase would not be the right >> [laughter] >> Yeah, now now's not the now's not the time to YOLO your money into something [laughter] else. Uh like an appreciating asset or a car. Cars are expensive. You don't need that extra debt. And certainly if you are buying a car, don't get an 84-month loan.

[00:07:04]There's that. Yeah. Uh thank you so much. Enjoy your weekend. We always appreciate uh having you on the show.