Mortgage rates continued their ascension toward 7% this week, raising doubts about the approaching spring homebuying season.
The 30-year fixed-rate mortgage averaged 6.90% as of Feb. 22, an increase from last week’s figure of 6.77%, according to Freddie Mac’s Primary Mortgage Market Survey released on Thursday.
Meanwhile, the 15-year fixed rate averaged 6.29% this week, up from 6.12% during the prior week. And HousingWire’s Mortgage Rates Center showed that Polly’s average 30-year fixed rate for conventional loans was 7.19% on Thursday, up from 7.09% at the same time last week.
“Strong incoming economic and inflation data has caused the market to re-evaluate the path of monetary policy, leading to higher mortgage rates,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
“Historically, the combination of a vibrant economy and modestly higher rates did not meaningfully impact the housing market. The current cycle is different than historical norms, as housing affordability is so low that good economic news equates to bad news for homebuyers, who are sensitive to even minor shifts in affordability.”
Even though the Federal Reserve’s Federal Open Market Committee (FOMC) expressed cautious optimism at its meeting in January, policymakers are in no rush to apply rate cuts in 2024. In the FOMC minutes released on Wednesday, members of the committee indicated that no cuts should be expected until the rate-setting body held “greater confidence” that inflation was receding.
Recent surges in new listings bode well for a strong homebuying season this spring. But rising mortgage rates could disrupt the plans of many rate-sensitive buyers, especially in a market where consumers were anticipating lower mortgage rates, according to Realtor.com economist Jiayi Xu.
“Consequently, it is crucial for homebuyers to safeguard their budget against rate fluctuations by utilizing a mortgage calculator to comprehend the impact of mortgage rate changes on their payments and purchasing plans,” Xu said in a statement.