Mortgage rates tick up for the second week in a row
By Anna Bahney, CNN
Mortgage rates inched up again this week. Prior to last week’s rise, rates had dropped for five weeks in a row as inflation continues to ease.
The 30-year fixed-rate mortgage averaged 6.43% in the week ending April 27, up slightly from 6.39% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.10%.
Even though rates ticked up for the second week in a row, with the rate of inflation decelerating, mortgage rates should gently decline over the course of the rest of this year, said Sam Khater, Freddie Mac’s chief economist.
“Incoming data suggest the housing market has stabilized from a sales and house price perspective,” Khater said. “The prospect of lower mortgage rates for the remainder of the year should be welcome news to borrowers who are looking to purchase a home.”
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.
Buyers have shown themselves to be remarkably sensitive to mortgage rate fluctuations.
Still, despite slightly higher rates last week, purchase applications increased last week from the week before, according to the Mortgage Bankers Association. Applications are still well below levels seen a year ago.
“Financial markets are anticipating that the Federal Reserve will raise short-term rates at its next meeting, which has pushed Treasury yields and mortgages rates higher in recent weeks,” said Bob Broeksmit, MBA President and CEO.
The Fed’s policymaking committee is set to meet next week. At its last meeting, in March, the Fed raised interest rates by a quarter point amid attempts to fight stubbornly high inflation while addressing risks to financial stability.
The Fed does not set the interest rates that borrowers pay on mortgages directly, but its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.
Buyers who need to buy this spring are going ahead with their mortgage applications, said Broeksmit. However, he noted that “high home prices and low supply continue to be obstacles for households wanting to buy a home this spring.”
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