Mortgage rates rose for the fifth week in a row
Key findings
- Mortgage rates rose for a fifth week in a row, with the average rate on 30-year fixed-rate home loans rising to 6.73%.
- The rise in mortgage rates came after officials suggested the Federal Reserve would remain aggressive in its rate hikes to fight inflation.
- Higher rates dampened home sales, with existing home sales falling for the 12th straight month in January.
Mortgage rates jumped for a fifth straight week after Federal Reserve Chairman Jerome Powell and other FOMC members indicated the central bank would continue its aggressive monetary policy to fight inflation.
Freddie Mac reported that the average rate on a 30-year fixed-rate home loan (up to $726,200) was 6.73%, up from 6.65% a week ago. This is the highest level since early November, when it hit a two-decade high of 7.08%. After that peak in November, rates fell to 6.09% in early February, a five-month low, before rising again.
Freddie Mac Chief Economist Sam Hatter explained that consumers are still spending in sectors that are not as sensitive to interest rates, such as travel and eating out. However, those affected by higher borrowing costs, such as housing, are adversely affected by the Fed’s moves. He said that “as a result, prospective homebuyers continue to face the complex challenges of affordability and low inventory.”
Restriction on Home Sales
This makes home purchases more difficult. The National Association of Realtors (NAR) previously reported that sales of existing homes fell for the 12th straight month in January due to high prices and high mortgage rates.
Nadia Evangelou, NAR’s senior economist and director of real estate research, warned that borrowing costs could rise even depending on the upcoming jobs and inflation reports. However, she added that it could still be a good time to buy a home, as rates are considered historically low even at these levels.