Rates Back Up To Near 7%

Rates took a turn for the worse last week, rising back to nearly 7%, as economic data soured analysts’ moods on easing rates. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.87%, up from the week prior’s 6.74%. A year ago at this time, the 30-year FRM averaged 6.42%. This breaks a two-week streak of declines. Mortgage applications slipped this week as rate-sensitive Americans backed away from the market.  The 15-year fixed rate also rose from 6.16% to 6.21%. A year ago, it averaged 5.68%. The Central Bank outlined cuts to come in 2024 but held the benchmark rate steady during their March meeting. Inflation has eased over the past year but committee members do not…

Rates Near 7% Send Applications Tumbling

Mortgage applications are yo-yoing as affordability-minded buyers respond to fluctuating rates. The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — decreased by 1.6%, following the week prior’s 7.1% bump. Adjusted purchase applications slipped by 1%, while the unadjusted index was down 1% and 14% lower YOY.  Rates drove the downturn, as they jumped to 6.97% after three weeks of decreases. Too-hot inflation data is moving rates around, though they have mostly stayed in the mid- to high-6’s. “Mortgage applications continued to show sensitivity to rate movements, and both purchase and refinance activity decreased over the week. With housing supply low and prices high, the average loan size…

Starts, Permits Made A Comeback In February

Residential starts made a comeback last month after severe winter weather slowed builders down. Residential home construction increased by 10.7% in February to a 1.52 million annualized rate, according to data from the U.S. Census Bureau. This is the largest increase since May, and well above Bloomberg estimates of a 1.44 million pace. Both single-family and multifamily construction increased, with multifamily starts in particular rising 8.3% after a significant dip. Permit applications also performed well, soaring to 1.52 million, the fastest rate since August. They offer an indication of future construction. Builders are feeling optimistic as mortgage rates stabilize, enticing buyers off the sidelines. Existing inventory remains constrained, making new construction a hot commodity for buyers. “With the Federal Reserve…

Rates Averaging Close To 7%

Mortgage rates aren’t going down as the spring homebuying season rapidly approaches. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.90%, up from the week prior’s 6.77%. A year ago at this time, the 30-year FRM averaged 6.50%. The 15-year fixed jumped to 6.29% from 6.12%. A year ago, it averaged 5.76%. “Strong incoming economic and inflation data has caused the market to re-evaluate the path of monetary policy, leading to higher mortgage rates,” said Sam Khater, Freddie Mac’s Chief Economist.  “Historically, the combination of a vibrant economy and modestly higher rates did not meaningfully impact the housing market. The current cycle is different than historical norms, as housing affordability is so low that good economic…

Powell Responds To Legislative Pressure As Feds Hold Rates Steady

By PATRICK LAVERY Saying the economy has surprised even the experts since the start of the COVID-19 pandemic nearly four years ago, Federal Reserve Board Chairman Jerome Powell on Wednesday announced that the Fed would hold its ground for now and keep its policy interest rate unchanged at its current range of 5.25% to 5.5%. “We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in prepared remarks following the first two-day Federal Open Market Committee meeting of 2024. The decision by the FOMC was not unexpected, and…

Rates Remain Effectively Unchanged At 6.62%

Mortgage rates remained basically unchanged last week as markets adjust to economic expectations for 2024. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.62%, inching up from the week prior’s 6.61%. A year ago at this time, the 30-year FRM averaged 6.48%. This is the first increase since October. Rates have fallen more than a full percentage point since then, giving homebuyers more breathing room as they struggle against record-high unaffordability. The 15-year fixed rate dropped, however, from 5.93% to 5.89%. A year ago, it averaged 5.73%. Freddie Mac Chief Economist Sam Khater ascribed the news to the slow machinations of the market as it “digests incoming economic data.” He pointed out that rates stopped their…

Rates Fall Below 7%

Mortgage rates dipped below 7% for the first time since August after the Federal Reserve set the stage for rate cuts in the coming year. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.95%, down from the week prior’s 7.03%. A year ago at this time, the 30-year FRM averaged 6.31%. It is now down nearly 90 bps in the last six weeks. This lowers the monthly mortgage payment for a $400,000 house to $2,118, down $183 from recent peaks. The 15-year fixed rate, on the other hand, rose to 6.38%% from 6.29%. A year ago, it averaged 5.54%. “Potential homebuyers received welcome news this week,” said Sam Khater, Freddie Mac’s Chief Economist.  “Given inflation continues…

Jobs Report Adds Pressure To Fed Ahead Of FOMC Meeting

The labor market experienced unexpected gains last month, with nonfarm payrolls rising 199,000, adding to a 150,000 bump in October. Unemployment fell to 2.7%, workforce participation increased, and monthly wage growth saw their biggest boost of the year. This paints a difficult picture for the Fed moving into its FOMC meeting, scheduled for this week. The Central Bank prefers a slower hiring pace to help it combat inflation. Its rate hikes have moved the economy closer to its 2% inflation target, down from 9.1% in June 2022 to 3.2% last month. Investors are hoping for cuts to federal funds rate sooner rather than later but November’s employment gains give the Federal Reserve more reason to hold interest rates at their…

Affordability FIopped In 2023, But Redfin Predicts A Brighter New Year

This year was one of the worst on record for affordability. But with the market at an all-time low, the only move now is up, according to a new analysis by Redfin. A homebuyer with the median U.S. income needed to spend 41% of their earnings on monthly home costs in 2023, a record high in Redfin’s data (dating to 2012) and fully 10% more than just two years ago.  In some hot markets, like California’s Anaheim and San Francisco, that number jumps to more than 80%. But Redfin expects mortgage rates and home prices to both cool in 2024, paving the way for more Americans to buy their dream home. “A perfect storm of inflation, high prices, soaring mortgage…

Rates Cool, Ending Weeks-Long Upward Streak

Borrowers struggling with rampant unaffordability are seeing some relief as mortgage rates cool, ending an upward swing. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.76%, down from 7.79%. A year ago at this time, the 30-year FRM averaged 6.95%. The 15-year fixed rate remained unchanged at 7.03%. A year ago, it averaged 6.29%. “The 30-year fixed-rate mortgage paused its multi-week climb but continues to hover under 8%,” said Sam Khater, Freddie Mac’s Chief Economist. “The Federal Reserve again decided not to raise interest rates but have not ruled out a hike before year-end. Coupled with geopolitical uncertainty, this ambiguity around monetary policy will likely have an impact on the overall economic landscape and may continue…