Mortgage rates moved closer to 7% after bleak news from Federal Reserve Chair Jerome Powell this week.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage rate averaged 6.73%, up from 6.65% the week prior.
A year ago at this time, the 30-year FRM averaged 3.85%.
The 15-year fixed-rate mortgage rose from 5.89% to 5.95%. A year ago, it averaged 3.09%.
“Mortgage rates continue their upward trajectory as the Federal Reserve signals a more aggressive stance on monetary policy,” said Sam Khater, Freddie Mac’s Chief Economist.
“Overall, consumers are spending in sectors that are not interest rate sensitive, such as travel and dining out. However, rate-sensitive sectors, such as housing, continue to be adversely affected. As a result, would-be homebuyers continue to face the compounding challenges of affordability and low inventory,” Kan added.
Rates will likely go even higher if the central bank determines inflation isn’t improving. Powell has laid out an “aggressive” plan to bring inflation back towards 2%, including a possible half-point rate hike this month.
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
February’s unemployment report offered mixed signals about the strength of the economy.
Nonfarm payrolls increased but a broad measure of monthly wage growth decreased, a combination that might push the FOMC towards a quarter-point hike. Stock futures rose as a result.
Bloomberg economists remain wary of the quarter-point narrative, however.
“The topline print exceeded expectations by so much that it clears the way for the Fed to follow through with a 50-bp hike – despite several signs of softening in the report, such as reduced work hours and a slowdown in average hourly earnings growth,” economists Anna Wong, Stuart Paul, and Eliza Winger stated in a note.
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Interest rates are rising as the spring homebuying season starts in many parts of the country. Writer Patrick Lavery has the story. https://t.co/GeOwiMC2PQ
— The Mortgage Note (@TheMortgageNote) March 9, 2023
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