Mortgage rates rose for the first time in more than a month this week amid changing market expectations, according to data released Thursday by Freddie Mac.
The benchmark 30-year fixed rate mortgage increased to 6.39 percent from 6.27 percent a week ago, the data showed. At the same time a year ago, the average 30-year fixed rate mortgage stood at 5.11 percent.
Rising rates could weaken demand for housing further, exacerbating a drop in existing home sales revealed in private sector data released Thursday.
Existing home sales, which include transactions for single-family homes, townhomes, condominiums and co-ops, dipped by 2.4 percent last month to an annual rate of 4.4 million, according to data from the National Association of Realtors. Sales declined 22 percent year-over-year.
“For the first time in over a month, mortgage rates moved up due to shifting market expectations,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
“Home prices have stabilized somewhat, but with supply tight and rates stuck above six percent, affordable housing continues to be a serious issue for many potential homebuyers,” Khater continued. “Unless rates drop into the mid five percent range, demand will only modestly recover.”
The Federal Reserve’s fight with inflation has led to months of volatile mortgage rates. After reaching a high at more than 7 percent late last year rates slowly declined and settled above 6 percent.
But some economists expect the U.S. central bank to hike rates again, which could keep mortgage rates high and further hamper housing affordability.
“With monetary policy on a tightening path and price growth still gaining, the 30-year fixed mortgage rate will continue bouncing in the 6% – 7% window where it’s been since September 2022,” George Ratiu, chief economist of Keeping Current Matters, a real estate consultant company, said in a statement.
“For buyers of a median-price home, today’s rate translates into a $2,100 monthly mortgage payment,” Ratiu said.