By Anna Bahney, CNN Business
Mortgage rates rose again this week as the conflict in Ukraine and rising inflation continued to weigh on the US economy. The 30-year fixed-rate mortgage averaged 4.67% in the week ending March 31, up from 4.42% the week before, according to Freddie Mac.
Rates climbed in the face of rising inflation and ongoing supply disruptions, said Sam Khater, Freddie Mac’s chief economist.
Rising mortgage rates add yet another hurdle for prospective homebuyers who have been met with record low levels of housing inventory and soaring home prices.
“Purchase demand has weakened modestly but has continued to outpace expectations,” he said. “This is largely due to unmet demand from first-time homebuyers as well as a select few who had been waiting for rates to hit a cyclical low.”
Moving toward 5%
If rates continue to climb along their recent trajectory they would be hitting 5% in a matter of weeks, said Danielle Hale, chief economist for Realtor.com.
She said some economic indicators — like a strong labor market in which job openings and quit rates among workers remain near all-time highs — show that it is difficult for firms to hire the workers they need. “This could slow the pace at which mortgage rates reach that 5% milestone, granting a temporary reprieve to home shoppers hoping to find a home and lock in a rate before they trend higher,” Hale said.
Home prices have continued their recent climb, and rising mortgage rates are an added consideration for buyers, when costs are rising for other budget items such as groceries and gas, said Hale.
“With rents continuing to rise at a double-digit pace nationwide and in many markets, buyers remain motivated,” she said.
For today’s home shoppers who finance 80% of a home at the median listing price, the monthly mortgage payment is up more than $440, or more than 36% compared to a year ago, Hale said.
“The steep increase in costs is likely to price out some buyers, and may lead to more options and less competition for home shoppers who can afford to stick with their home search,” she said.
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