As financial markets adapt to a revised Federal Reserve interest rate schedule, mortgage rates have taken a notable upward turn, surpassing the 7.0% mark for the first time in 2024. This week, the benchmark 30-year fixed mortgage rate rose to 7.10%, marking a significant 22 basis point increase from the previous week, according to the latest Freddie Mac weekly survey.
This increase represents the third consecutive weekly rise, pushing the rate a full 50 basis points above the level at which it started the year. The 15-year fixed mortgage rate also experienced a sharp rise, climbing to 6.39%, up 23 basis points from last week and similarly up by 50 basis points since January.
These rising rates come as the Federal Reserve has signaled a more dovish approach to rate cuts, causing a recalibration in the housing finance market. The uptick in rates reflects growing uncertainty among investors about the pace and extent of future Fed rate cuts, fueling volatility in mortgage rates.
Sam Khater, Freddie Mac’s Chief Economist, commented on the current climate, stating, “As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year.” He noted that while purchase applications had seen a modest increase last week, the sustainability of this trend is questionable as more homebuyers may find it difficult to cope with further rate increases.
The continuous rise in mortgage rates poses significant challenges for the housing market. Potential buyers are caught in a dilemma between advancing their purchases to avoid further hikes and waiting out for a potential dip. This uncertainty is likely to impact both the demand and affordability of housing in the coming months.