Mortgage rates rose above 6.6% for the first time since mid-December

Washington DC
CNN
—

After months of treading water, U.S. mortgage rates rose on Thursday following strong employment and inflation reports.

The 30-year fixed-rate mortgage averaged 6.77% in the week ended Feb. 15, up from 6.64% the previous week, according to data from Freddie Mac. A year ago, the average 30-year fixed rate was 6.32%.

“On the heels Consumer prices rose more than expected “Mortgage rates are up this week,” said Sam Cotter, chief economist at Freddie Mac.

“The economy has been performing well so far this year, and rates will remain high for a long time, which will slow down the spring home buying season,” Khader said in a statement.

So far in 2024, home mortgage applications are down by more than half in all states from a year earlier, Khader said.

“Mortgage rates remain volatile due to strong employment data, which peaked last week and led to a 2% drop in applications,” Mortgage Bankers Association CEO Bob Brockschmidt said in a release.

American economy It added 353,000 jobs in January. Nearly double expectations, according to the Labor Department's latest monthly employment snapshot.

More homes on the market and lower mortgage rates will be the two main drivers of any meaningful improvement in home sales this spring, Broeksmit said.

The average mortgage rate is based on the mortgage applications Freddie Mac receives from thousands of lenders across the country. The survey only includes borrowers with excellent credit who put 20% down. Current buyer's rate may vary.

Inflation remains stubbornly high

Mortgage rates are climbing because the economy is still hot.

In addition to the strong employment numbers, consumer price index data for January released on Tuesday showed inflation slowed more than expected last month.

After enduring 11 interest rate hikes in the past two years, the housing market has all but frozen and sales have plummeted. The highest level in 28 years. Economists, investors and housing market participants are waiting for the Federal Reserve to go beyond holding steady and cut its benchmark lending rate, with inflation hitting its target.

But Fed Chair Jerome Powell has insisted the central bank is unlikely to introduce a rate cut at its next policy meeting because incoming economic data is so strong.

“Recent inflation and employment measures maintained strength in January, confirming that a March rate cut is unlikely,” said Hannah Jones, senior economic research analyst at Realtor.com. “As a result, mortgage rates are likely to remain in the high-6% range until more concrete progress is made. [the central bank’s goal of] 2% inflation.

Although the central bank does not directly set the interest rates borrowers pay on mortgages, its actions affect them.

Mortgage rates tend to track the yield on 10-year US Treasuries, which moves based on Fed actions, what the Fed actually does, and investor reactions, particularly inflation expectations.

This is a developing story and will be updated.