Four Consecutive Weeks Increase In Mortgage Rates

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Four Consecutive Weeks Increase In Mortgage Rates

Mar 16, 2023 | News | 0 comments

Mortgage rates in the US have been steadily rising for the past four weeks, according to data from Freddie Mac’s Primary Mortgage Market Survey. The 30-year fixed-rate mortgage averaged 6.65% for the week ending 2 March, up from the previous week’s 6.5%. Freddie Mac’s chief economist, Sam Khater, noted that at the beginning of the year, the 30-year fixed-rate mortgage had decreased due to expectations of lower economic growth, inflation and a loosening of monetary policy. However, with sustained economic growth and continued inflation, mortgage rates have risen towards 7%. This has hindered affordability and made it difficult for potential buyers to act, especially for repeat buyers with existing mortgages at less than half of current rates.

To corroborate this analysis, Freddie Mac provided two “news facts”: the average 30-year fixed-rate mortgage was 6.65% as of March 2, 2023, compared to the previous week’s 6.5%, and the average 15-year fixed-rate mortgage was 5.89%, an increase from the previous week’s 5.76%. A year earlier, the 30-year FRM averaged 3.76%, and the 15-year FRM averaged 3.01%.

Although mortgage rates had been on a downward trend since reaching 7.08% in November, they are now climbing back up. Additionally, the Fed is expected to continue increasing its benchmark lending rate in its ongoing battle to tame inflation. While the Fed does not directly set the interest rates paid by borrowers on their mortgages, the central bank’s moves influence those rates. Mortgage rates typically track the yield on 10-year US Treasury bonds, which are susceptible to actions from the Fed. As Treasury yields rise or fall, so do mortgage rates.

It is worth noting that rising mortgage rates could slow down the housing market and lead to a decrease in demand for homes. On the other hand, higher mortgage rates could encourage homeowners to stay put and not sell, further exacerbating the shortage of available homes for sale. Additionally, higher mortgage rates could make it more difficult for those with existing mortgages to refinance and obtain more favorable rates.

Overall, the recent rise in mortgage rates serves as a reminder of inflation-induced economic heat and the impact it can have on the housing market. Potential homebuyers and current homeowners alike should carefully consider their financial situation before making any significant housing-related decisions.