Mortgage rates continued to trend up this week and dampen homebuyer momentum.
The 30-year fixed-rate mortgage averaged 6.94% as of Feb. 29, an increase from last week’s figure of 6.90%, according to Freddie Mac’s Primary Mortgage Market Survey released on Thursday.
Meanwhile, the 15-year fixed rate averaged 6.26% this week, down from 6.29% during the prior week. And HousingWire’s Mortgage Rates Center showed that Polly’s average 30-year fixed rate for conventional loans was 7.23% on Thursday, up from 7.19% at the same time last week.
“Mortgage rates continued their ascent this week, reaching a two-month high and flirting with 7% yet again,” Freddie Mac chief economist Sam Khater said in a statement.
“The recent boomerang in rates has dampened already tentative homebuyer momentum as we approach the spring, a historically busy season for homebuying. While sales of newly built homes are trending in a positive direction, higher rates and elevated prices continue to pose affordability challenges that may leave potential homebuyers on the sidelines.”
The release of the core Personal Consumption Expenditures Price Index (PCE) on Thursday received a lot of attention as it is considered to be the Federal Reserve’s preferred inflation measure for monetary policy decisions. In January, the PCE rose at the fastest pace in nearly a year, supporting the central bank’s conservative approach to rate cuts.
Many home shoppers are delaying their purchases in the hopes of lower mortgage rates and more inventory in the spring. Other buyers are choosing to pivot to new construction, attracted to the concessions offered by homebuilders, including rate buydowns.
Given the recent string of strong economic data, the Fed is likely to push off rate cuts until this summer.
“It’s quite possible that the Fed may not change its strategy on interest rates until late this year, so potential home buyers may need to contend with high mortgage rates for the remainder of the year,” CoreLogic chief economist Selma Hepp said in a statement.
