Mortgage Rates Rising

Mortgage Rates on the Rise

Mortgage rates have reached their highest level since mid-December, posing challenges for prospective buyers entering the busy spring home buying season.

Increase in Rates

The average 30-year fixed mortgage rate now stands at 6.9%, marking a 0.13 percentage point increase from last week. This uptick is the highest weekly rate recorded since December 14. Throughout the year, mortgage rates have seen a rise of approximately 0.3 percentage point, with recent weeks being influenced by inflation and economic data exceeding expectations.

Impact on Home Buyers

In a departure from historical trends, a robust economy and slightly elevated mortgage rates are impacting the housing market significantly. As per Sam Khater, chief economist at Freddie Mac, the current environment of low housing affordability magnifies the impact of positive economic news, making it challenging for home buyers to navigate even minor shifts in affordability.

Affordability Under Pressure

Last year, housing costs surged as Freddie Mac's mortgage rates nearly hit 8%. While lower rates provided relief during the winter months, the recent increase in mortgage rates is intensifying the pressure on home affordability right as the prime home sales season kicks off.

Additional Challenges

In addition to rising rates, buyers face other challenges. The National Association of Realtors reported that the median existing-home price in January was $379,100, reflecting a 5.1% increase from the previous year. This rise outpaced wage gains for the first time in 14 months, according to the trade group's chief economist.

Rate Fluctuations

Various mortgage rate indicators are showing rates surpassing 7%. The Mortgage Bankers Association noted an average conforming 30-year fixed mortgage rate of 7.06% in mid-February. Mortgage rates monitored by Mortgage News Daily have remained above 7% since February 13.

As buyers navigate these turbulent waters, staying informed and proactive will be key in making sound decisions within the current real estate landscape.