Mortgage rates soared to their highest level since November, as the markets try to gauge if the Federal Reserve plans another hike in interest rates.
The average rate on a 30-year fixed-rate mortgage was 6.79% as of Thursday, according to
Freddie Mac
‘s primary mortgage market survey. The gain represents an increase of 0.22 percentage point from the week prior, and is the highest weekly rate since Nov. 10, when the average rate was above 7%. Rates measured by the survey fell as low as 6.09% in February before climbing higher on bank sector uncertainty.
“Mortgage rates jumped this week, as a buoyant economy has prompted the market to price-in the likelihood of another Federal Reserve rate hike,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Although there has been a steady flow of purchase demand around rates in the low to mid six percent range, that demand is likely to weaken as rates approach seven percent.”
Mortgage rates have fluctuated in recent weeks as markets have tried to anticipate the Federal Reserve’s next move. Expectations of another rate hike resulted in higher mortgage rates last week, cutting into loan application volume, the Mortgage Bankers Association said Wednesday.
“Inflation is still running too high, and recent economic data is beginning to convince investors that the Federal Reserve will not be cutting rates anytime soon,” Mike Fratantoni, the trade group’s chief economist, said in a statement. “Mortgage rates for conforming balance 30-year loans were being quoted above 7 percent by some lenders last week.”
As rates moved higher, home buyer demand dropped. The association’s measure of purchase applications fell a seasonally-adjusted 3% from one week prior, and was 31% lower than a year ago on an unadjusted basis. “While refinance demand is almost entirely driven by the level of rates, purchase volume continues to be constrained by the lack of homes on the market,” Fratantoni said.
Mortgage rates climbed sharply in 2022. The average 30-year fixed-rate mortgage peaked at 7.08% in October and November before falling back in the first quarter of 2023, according to Freddie Mac’s data. Rates measured by the survey fell as low as 6.09% in February.
While this week’s rate was higher than last week’s, one more frequent measure of mortgage rates shows that daily rates have retreated some since peaking late last week. Mortgage News Daily’s survey results through Wednesday show that the 30-year fixed rate climbed through much of last week, reaching 7.14% on Friday, before falling to 6.88% as of yesterday.
Write to Shaina Mishkin at [email protected]
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