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Mortgage rates rose again this week, spelling further bad news for weary would-be buyers and sellers as housing inflation continues to surge.
Freddie Mac’s latest Primary Mortgage Market Survey released Thursday showed that the average rate for the benchmark 30-year fixed mortgage climbed to 6.77% this week, up from 6.64% last week. The 30-year average rate was 6.32% a year ago.
A home for sale in Cupertino, California, on Feb. 7, 2024. Strong demand for housing amid a dearth of inventory is driving up home prices. (Loren Elliott/Bloomberg via Getty Images / Getty Images)
The rate on the 15-year fixed mortgage also increased, averaging 6.12% after coming in last week at 5.9%. One year ago, the rate on the 15-year fixed note averaged 5.51%.
At the same time, home prices continued to climb, edging out further prospective buyers as they are increasingly priced out of the market.
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The Mortgage Bankers Association’s (MBA) index of mortgage applications fell 2.3% for the week ended Feb. 9, compared with the previous week, according to new data published Wednesday.
Homeowners locked in at low interest rates have a disincentive to sell at mid-6% interest rates, with a majority locked in below 5%. (David McNew/Getty Images / Getty Images)
Meanwhile, many homeowners interested in moving are opting to stay put, because of the financial disincentive of taking on a significantly higher mortgage rate than they currently have.
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Realtor.com senior economic research analyst Hannah Jones said now that a Federal Reserve interest rate cut looks unlikely in March, mortgage rates are expected to continue to hover in the mid-6% range as they have for several weeks.
Buyer activity tends to pick up in the spring, and if that happens without a material drop in mortgage rates, the increase in demand could make the affordability crisis even worse.
An “Open House” sign outside of a home in Washington, DC, US, on Sunday, Nov. 19, 2023. (Nathan Howard/Bloomberg via Getty Images / Getty Images)
“Many homeowners still feel locked-in by elevated mortgage rates,” Jones said, “which could lead to upward pressure on prices if buyer demand picks up faster than seller activity.”
But there are signs that home purchase demand could remain weak.
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“The economy has been performing well so far this year and rates may stay higher for longer, potentially slowing the spring homebuying season,” Freddie Mac chief economist Sam Khater said in a statement. “According to our data, mortgage applications to buy a home so far in 2024 are down in more than half of all states compared to a year earlier.”
FOX Business’ Megan Henney contributed to this report.
