Mortgage Rates Climb To 7.2%, Highest Since November 2022
Mortgage Rates Climb To 7.2%, Highest Since November 2022...
U.S. mortgage rates surged to 7.2% this week, hitting their highest level in over three years and squeezing homebuyers already struggling with record-high prices. The jump comes as stubborn inflation delays expected Federal Reserve rate cuts, forcing lenders to adjust borrowing costs upward.
Freddie Mac's weekly survey released Thursday showed the average 30-year fixed mortgage rate rose from 6.9% last week. This marks the fourth consecutive weekly increase and pushes rates near their 2022 peak of 7.08%. The 15-year fixed rate also climbed to 6.6%, up from 6.3%.
"This is a gut punch for spring homebuyers," said Lawrence Yun, chief economist at the National Association of Realtors. He noted the rate hike adds $200 to monthly payments on a typical $400,000 loan compared to December 2023 rates.
The surge follows stronger-than-expected March jobs data and hot inflation readings that dashed hopes for imminent Fed relief. Mortgage rates loosely track the 10-year Treasury yield, which spiked to 4.5% this week - its highest since November.
Home purchase applications dropped 5% last week according to the Mortgage Bankers Association, while refinance demand plunged 15%. "We're seeing buyers pause or lower their price ranges," said Redfin agent Chen Zhao in Seattle. "Sellers are starting to adjust expectations too."
Analysts say the rate jump could prolong the housing market's stagnation. Existing home sales remain near 30-year lows as the "golden handcuffs" effect keeps potential sellers with sub-3% mortgages from listing properties. The median home price hit $384,500 in February, up 5.7% year-over-year.
The White House acknowledged the pressure Thursday, with press secretary Karine Jean-Pierre calling housing affordability "a top priority." Economists now predict mortgage rates may not dip below 6% until late 2024 at the earliest.
Homebuilders are responding by boosting incentives. Lennar and D.R. Horton recently announced rate buydowns and closing cost assistance on select homes. "Builders recognize they need to bridge the affordability gap," said NAHB chief economist Robert Dietz.
With the spring buying season underway, experts advise shoppers to compare multiple lenders and consider adjustable-rate mortgages. "The difference between 6.8% and 7.2% could mean qualifying for $50,000 less house," warned Bankrate analyst Greg McBride.
