SALT LAKE CITY — Mortgage rates climbed to more than 6% last week for the first time since 2008, a moment in time when the housing market crashed.
Federal mortgage lender, Freddie Mac, reported Thursday that the 30-year rate rose to 6.02%, up from 5.89% the previous week.
Zach Van Emmerik bought a new home in Davis County last month.
"My biggest concern was the interest rates," said Van Emmerik. "I think I got in around a five and a quarter."
Van Emmerik says the higher rates now, versus last month, would have impacted had he waited to buy a new home.
"If I would have waited another month and that would have been at six-percent it probably would have limited my purchasing power and it probably would have pushed me out of where I wanted to, where I wanted to live, the city I wanted to live in," said Van Emmerik. "I don't know how much that would have raised my mortgage payment a month, a couple $100 and that hits pretty hard."
Dejan Eskic, a senior research fellow with the Kem C. Gardner Policy Institute says the rate hike means Utah is going to see a little bit of slowing of activity. He says it also signals that home prices have peaked and a decrease in prices has begun.
"On firsthand, that might be good for potential buyers, but the prices are decreasing because mortgage rates are so high, so that monthly payment is actually still relatively very high," said Eskic.
Eskic adds that the bump in mortgage rates is pushing medium mortgage payments from a year ago, that were anywhere from $1,500-1,700 a month, up to around $2,900. The result is that up 73% of homebuyers are priced out of the market in Utah.
"All of a sudden, the buyer pool has shrunk; and so for those selling their houses, we're seeing them sit on the market a lot longer, but also those that want to buy a home, they're kind of at the mercy of the wild swinging rates each week," said Eskic.
According to Eskic, the median price of a home in Utah currently sits around $500,000.
"I think more of the same what we're seeing now until something changes with the interest rates were not going to see much change for the foreseeable future," said Eskic.
Looking at all the active residential mortgages in Utah, Eskic says 80% of those mortgages have an interest rate that's 4% or below.
For those residents looking to upgrade to a bigger house, they would have to pay more, not just for the house, but for the higher rates currently found.
Those like Van Emmerik, who bought their homes just before the latest jump in mortgage rates, are breathing a little sigh of relief.
"I'm glad I bought what I did and if I hadn't, like I said, I probably would have to move somewhere else or downsize," he said.
Eskic says the demand for renting still persists, even though the for sale housing is cooling off because of the jump in rates.
