The average rate on the popular 30-year fixed mortgage crossed over 7% on April 1, according to Mortgage News Daily, and it just kept going. It now sits right around 7.5%, the highest level since mid-November of last year.<\/p>\n
Rates hit their highest level in a few decades last October, causing home sales to grind to a halt. Builders jumped to buy down rates for their customers and managed to do better than existing home sellers.<\/p>\n
Rates then fell through mid-January to the mid-6% range and held there into February, causing a surge in home sales. But then they began rising again.<\/p>\n
\u201cBy mid-February, a pick-up in inflation reset expectations, putting mortgage rates back on an upward trend, and more recent data and comments from Fed Chair [Jerome] Powell have only underscored inflation concerns,\u201d said Danielle Hale, chief economist for Realtor.com. \u201cSales data over the next few months is likely to reflect the impact of now-higher mortgage rates.\u201d<\/p>\n
Even with rates higher, however, mortgage applications to purchase a home rose 5% last week compared with the previous week, according to the Mortgage Bankers Association\u2019s seasonally adjusted index. Demand was still 10% lower than the same week one year ago, even with rates now 70 basis points higher than they were a year ago.<\/p>\n
\u201cDespite these higher rates, application activity picked up, possibly as some borrowers decided to act in case rates continue to rise,\u201d said Joel Kan, MBA\u2019s chief economist.<\/p>\n
That may be short-lived, however, as affordability weakens even further. While there is more supply on the market now than there was a year ago, it is still at a very low level historically. That has caused homes to move faster as the competition increases. Anyone waiting for rates to drop significantly may be waiting for a while.<\/p>\n
\u201cRecent economic data shows that the economy and job market remain strong, which is likely to keep mortgage rates at these elevated levels for the near future,\u201d said Bob Broeksmit, MBA\u2019s president and CEO.<\/p>\n<\/p>\n
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