Affordability takes another hit
After a two-week decline, mortgage rates have reversed course and are on the rise again.
The average 30-year fixed-rate mortgage (FRM) has climbed to 6.87%, according to the latest figures released by Freddie Mac.
This marks an increase from the previous week's rate of 6.74%. and continues a trend of rising borrowing costs influenced by the Federal Reserve's decision to leave interest rates unchanged.
The 15-year FRM also rose, averaging 6.21% compared to last week's 6.16%. Both the 30-year (up from 6.42%) and 15-year (up from 5.68%) rates are higher than the same period last year.
Despite higher rates, Freddie Mac chief economist Sam Khater said homebuilders are optimistic due to "pent-up demand, an ongoing supply shortage and expectations that the Federal Reserve will cut rates later in the year.”
Read more: US existing-home sales soar
Meanwhile, Fannie Mae chief economist Doug Duncan forecasted potential upward pressure on rates due to recent economic data.
“The housing market is likely to continue to face the dual affordability constraints of high home prices and elevated interest rates in 2024,” Duncan said. "Hotter-than-expected inflation data and strong payroll numbers are likely to apply more upward pressure to mortgage rates this year than we'd previously forecast as markets continue to evolve their expectations of future monetary policy.
“Still, while we don’t expect a dramatic surge in the supply of homes for sale, we do anticipate an increase in the level of market transactions relative to 2023 -- even if mortgage rates remain elevated.”
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