Mortgage Rates Ascend for Third Consecutive Week, Nearing 7% Threshold
- Category: News
In a continuation of a trend observed over the past three weeks, mortgage rates edged higher, moving closer to the significant 7% mark. Data released by Freddie Mac on Thursday revealed that the 30-year fixed-rate mortgage averaged 6.90% in the week ending February 22, marking an increase from the previous week’s 6.77%. A year ago, the average 30-year fixed-rate stood at 6.50%. The recent upward trajectory in mortgage rates follows a period of smaller fluctuations over the past two months, signaling a departure from the high of 7.79% reached in October 2023.
Federal Reserve Influence on Mortgage Rates
While the Federal Reserve does not directly dictate borrower interest rates, its decisions wield a considerable influence over them. According to Sam Khater, Freddie Mac’s chief economist, the market’s response to indications from the Federal Reserve that it will delay cutting its benchmark rate until later this year has contributed to the recent surge in mortgage rates. Economic and inflation data that surpassed expectations prompted a reevaluation of monetary policy, resulting in the upward trajectory of mortgage rates. Khater noted that historically, a robust economy alongside higher rates did not significantly impact the housing market, but the current cycle, characterized by low housing affordability, poses challenges for prospective homebuyers sensitive to even minor shifts in affordability.
In a continuation of a trend observed over the past three weeks, mortgage rates edged higher, moving closer to the significant 7% mark. Data released by Freddie Mac on Thursday revealed that the 30-year fixed-rate mortgage averaged 6.90% in the week ending February 22, marking an increase from the previous week’s 6.77%. A year ago, the average 30-year fixed-rate stood at 6.50%. The recent upward trajectory in mortgage rates follows a period of smaller fluctuations over the past two months, signaling a departure from the high of 7.79% reached in October 2023.
Impact on Homebuyers and Federal Reserve’s Approach
As mortgage rates inch toward the 7% mark, potential homebuyers, anticipating a cooling off in rates, are confronted with an unexpected reversal. Federal Reserve officials, while acknowledging the possibility of rate cuts in 2024, emphasize a cautious approach, seeking concrete evidence of sustained improvement in inflation before making any changes. Jiayi Xu, economist for Realtor.com, suggests that upcoming releases of economic projections and discussions by Federal Reserve Chair Powell may offer further insights into the central bank’s approach. With the next meeting of the Federal Open Market Committee scheduled for March, market participants will keenly observe developments that could shape the trajectory of mortgage rates in the coming months.
