Economy

Mortgage rates edge closer to 7%

Mortgage rates have trended higher in recent weeks as the market absorbs expectations that the Federal Reserve will not cut its benchmark lending rate until later this year. — Brendan Smialowski/AFP/Getty Images via CNN Newsource

By CNN Newsource

February 29, 2024 10:32 AM

Published February 29, 2024 10:03 AM

By Anna Bahney, CNN

Washington, DC (CNN) — Mortgage rates climbed for the fourth week in a row, inching closer to 7%.

The 30-year fixed-rate mortgage averaged 6.94% in the week ending February 29, up from 6.90% the previous week, according to data from Freddie Mac released Thursday. A year ago, the average 30-year fixed-rate was 6.65%.

“Mortgage rates continued their ascent this week, reaching a two-month high and flirting with 7% yet again,” said Sam Khater, Freddie Mac’s chief economist, in a statement.

Khater said the rise in rates during February has dampened already tentative homebuyer momentum heading into the spring, which is typically the busiest season for homebuying.

Since reaching a 20-year high of 7.79% in October, mortgage rates have been slowly falling. The average rate hovered at around 6.6% for more than a month, which brought improved affordability for homebuyers who have been struggling in one of the least affordable markets in decades.

But in recent weeks, as the market absorbs expectations that the Federal Reserve will not cut its benchmark lending rate until later this year, mortgage rates have trended higher.

While the Fed does not set the interest rates that borrowers pay on mortgages directly, its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions.

“Higher-than-anticipated inflation and jobs data are keeping upward pressure on mortgage rates, and an insufficient volume of existing homes for sale in many markets is making it even more difficult for many aspiring buyers to get in the market,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association.

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit. A current buyer’s rate may be different.

This is a developing story and will be updated.

Article Topic Follows: Economy

Jump to comments ↓