Mortgage Interest Rates on the Rise: Challenges for Homebuyers

Stay informed on the latest Freddie Mac survey data showing a rise in 30-year fixed-rate mortgages to 6.94%, posing challenges for potential homebuyers this spring.

Mortgage interest rates have continued to rise for the fourth consecutive week, posing challenges for potential homebuyers as they navigate an already difficult spring homebuying season. According to the latest Freddie Mac survey, the 30-year fixed-rate mortgage now stands at 6.94%, up from last week's 6.9% and reaching a two-month high. On the other hand, the 15-year rate saw a slight decrease, dropping from 6.29% to 6.26%.

The steady increase in rates can be attributed to the strength of the economy, which has led economists to reassess their expectations regarding potential interest rate cuts. While some had anticipated rate cuts as early as this spring, it now seems unlikely that the Federal Reserve will take any action until later in the year.

Despite the challenges posed by higher mortgage rates, there is some positive news for buyers. The rise in rates has led to an increase in inventory, with new listings rising by 13% year-over-year during the four weeks ending Feb. 25, marking the largest jump in nearly three years. Additionally, Altos Research reported that there are more sellers and fewer buyers entering the market as spring approaches. Price reductions have also seen an uptick for the first time since November, indicating a softening in home prices.

According to Altos Research, there are currently 498,000 single-family homes for sale, a 16% increase from last year but still below pre-pandemic levels for this time of year. However, despite the increase in inventory, mortgage applications have decreased by 5.6% from the previous week, with purchase applications down by 12% compared to a year ago.

The rise in mortgage rates presents challenges for homebuyers, but the increase in inventory and softening of home prices offer some relief in an otherwise competitive market.