Home loan rates are rising
Key findings
- A steady rise in mortgage rates in recent weeks has dampened hopes from early 2023 that housing affordability will improve.
- Previous expectations for lower inflation and monetary policy easing fell short, and mortgage rates hit their highest level since early November.
- The recent upward movement in prices is making it difficult for those looking to buy a home.
Mortgage rates rose for a fourth straight week, dampening optimism from earlier this year that housing affordability was improving.
Freddie Mac said the average rate on a 30-year fixed-rate home loan (up to $726,200) was 6.65 percent, up from 6.5 percent last week and the highest since early November.
Freddie Mac Chief Economist Sam Khatter indicated that going into 2023, borrowing costs have declined on expectations of slower economic growth, lower inflation and an easing of Fed monetary policy. However, this did not happen and mortgage rates boomeranged.
Harder to buy
Khater explained that lower rates in January have brought buyers back into the market. Now upward mobility is making it difficult for those who want to buy a home to do so. He added that this is especially true for repeat buyers who are currently paying half the current interest rate on their existing loan.
George Ratiu, senior economist at Realtor.com, said rising mortgage costs “exacerbate the affordability challenge as we enter the crucial spring home-buying season.” He noted that at today’s rate, buyers of a median-priced home would have a monthly payment of $2,132, a 49 percent jump from last year.