Mortgage rates are not rising fast enough to alleviate affordability issues. (iStock)
According to Freddie Mac, mortgage rates are stable in the mid-six range and show little sign of falling.
The average interest rate on a 30-year fixed-rate mortgage for the week ending February 8 was 6.64%, according to Freddie Mac’s latest research. Primary mortgage market research. This was a slight increase from the previous week’s average of 6.63%. A year ago, the average interest rate on a 30-year fixed-rate mortgage was 6.12%.
The average interest rate on a 15-year mortgage was 5.90%, down from 5.94% last week and up from 5.25% last year.
There is little sign that interest rates will fall heading into the spring home buying season. The Federal Reserve has kept interest rates unchanged, announcing last week that it would keep the federal funds rate at 5.25% to 5.5%, the highest level in 22 years. Meanwhile, the employment situation report for January showed solid results and the economy grew again in 2018. 4th quarter Exceed expectations for 2023.
“The economy and labor market remain strong, with wage growth outpacing inflation, which keeps consumer spending strong,” said Sam Cater, chief economist at Freddie Mac. Ta. “Meanwhile, affordability in the housing market is an ongoing issue due to persistently high house prices, rising mortgage rates, and a limited supply of housing, especially for first-time homebuyers and low-income earners. .”
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Home buyers are gradually returning as interest rates remain low
However, homebuyers have been trickling back into the housing market since late October, taking advantage of mortgage interest rates that have fallen by more than 1 percentage point.
Mortgage applications rose for the fourth time in five weeks as demand for refinances and home purchases continues to grow modestly as interest rates remain below their peak from last fall, according to the Mortgage Bankers Association. Ta. Weekly mortgage application survey.
The number of mortgage loan applications increased by a seasonally adjusted 3.7% from the previous week. On an unadjusted basis, the index rose 8%. Refinances as a share of mortgage activity increased to 35.4% of total applications from 34.2% the previous week.
The good news is that interest rates are stable, but homebuyers looking for a more affordable return may have to wait longer.
“The U.S. economy continues to show signs of strength, so interest rates are likely to remain stable through the spring home buying season, with no rate cuts expected until early summer,” said Dr. Thelma Hepp, Chief Economist at CoreLogic. said. “However, recent industry research shows that homebuyers are starting to become more optimistic about the direction of interest rates, with more homebuyers expecting interest rates to fall throughout the year.”
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Interest rate cuts are planned again this year
The Fed still expects to cut interest rates several times this year, but has not yet set a timeline for how quickly or by how far. Fed officials expect at least three rate cuts this year, with the central bank saying rates are expected to fall to 4.6%. Latest economic forecasts In its Summary of Economic Projections (SEP) it said:
Fannie Mae expects mortgage rates to fall below 6% by the end of 2024, based on the Fed’s move to cut rates sooner than expected. How quickly rates will be cut will depend on how quickly inflation approaches its 2% target rate or whether the Fed senses the U.S. economy is headed toward a recession.
“In a recent interview on 60 Minutes, Federal Reserve Chairman Jerome Powell strongly indicated that he would not cut interest rates before the economy reached its 2% inflation target,” Percy CEO Charles Williams said in a statement. ” he said. “With the jobs report still very strong, a rate cut is unlikely until March, and perhaps even May. And even then, there will be a slow, gradual rebound that will push mortgage balances below 6%. We’ll be lucky to raise interest rates by the end of the year. ”
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