Mortgage rates jumped to their highest reading since November as the timeline for highly anticipated interest rate cuts stretches deeper into 2024.
The average 30-year fixed mortgage rate hit 7.29 percent Wednesday, the highest reading since November, according to Mortgage News Daily.
The spike followed the release of new consumer price index inflation data for March, which came in slightly above economist expectations. The data raised concerns that the Federal Reserve would hold off on interest rates cuts that were forecasted in 2023.
Mortgage rates have risen significantly since the start of 2022, tracking closely with rising interest rates set by a committee of Fed officials. The central bank hiked borrowing costs from near-zero in March 2022 to a range of 5.25 percent to 5.5 percent last July, and has held rates steady at subsequent meetings.
The average 30-year fixed mortgage rate peaked at 8 percent in October, according to the daily mortgage index. Mortgage rates fell below 7 percent in December after the Fed signaled several interest rate cuts in 2024, but they have climbed again as new economic data indicates the fight against inflation has hit a plateau.
A series of still-elevated price, employment and growth data has pushed back the timeline for borrowing cost cuts. New government data released Wednesday revealed an uptick in inflation in March, with the index reading up 3.5 percent from a year ago.
High mortgage rates have hit homebuyers hard, particularly first-time homebuyers. To help circumvent high borrowing costs, more than one-third of homes were purchased in all-cash deals in February and the median down payment jumped 24.1 percent from a year ago, according to a recent report from the real estate company Redfin, boxing out buyers who can’t afford those options.