Mortgage Rates Keep Edging Toward 7%By RISMedia Staff
The 30-year-fixed-rate mortgage averaged 6.88% this week, marking a second week of increases and continued edging toward 7%, according to the latest Primary Mortgage Market Survey® (PMMS®) released by Freddie Mac Thursday. Last week the average rate increased from 6.79% to 6.82%.
This week’s numbers:
“Mortgage rates have been drifting higher for most of the year due to sustained inflation and the reevaluation of the Federal Reserve’s monetary policy path,” said Sam Khater, Freddie Mac’s chief economist. “While newly released inflation data from March continues to show a trend of very little movement, the financial market’s reaction paints a far different economic picture. Since inflation decelerated from 9% to 3% between June 2022 and June 2023, the annual growth rate of inflation has remained effectively flat, ranging from 3.1% to 3.7% and averaging 3.3%. The March estimate of 3.5% annual growth is in the middle of that range. However, the market’s reaction was dramatically different, as illustrated by a significant drop in the Dow Jones Industrial Average post-announcement.” Khater continued, “It’s clear that while the trend in inflation data has been close to flat for nearly a year, the narrative is much less clear and resembles the unrealized expectations of a recession from a year ago.” Realtor.com Senior Economic Research Analyst, Hannah Jones commented: “The Freddie Mac fixed rate for a 30-year mortgage jumped 6 basis points higher this week to 6.88% upon stronger-than-anticipated inflation and employment data. Investor optimism faltered as the economy added 303,000 jobs in March and inflation ticked up to 3.5% in the month. After the March CPI data release, 10-year treasury yields jumped roughly 15 basis points from 4.35% to 4.5%, the highest level since November 2023. Mortgage rates have remained in the 6.6% to 7% range since the beginning of the year, and will likely continue to hover in this range until inflation shows convincing progress towards the Fed’s 2% goal. “Eager buyers and sellers are hoping to see more favorable housing conditions as the spring selling season kicks off. However, mortgage rates crept closer to 7% this week as economic data, measured by both inflation and employment, remained strong. Inflation climbed in March in part due to a reversal in energy price trends, with gasoline prices up 5.5% since January after 4 months of declines. Climbing gas prices may spur some consumers to consider switching to an electric vehicle, which could generate more interest in EV-friendly housing markets. Whatever they may be looking for, buyers are in luck as new listing activity picked up 15.5% annually in March, which means more fresh options on the market.” |
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