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Mortgage Rates Rise Again, But Remain Affordable
Failing to budge for some time despite an ongoing effort by the Federal Reserve to push up interest rates to non-inflationary levels, mortgage interest rates have been rising in recent weeks and 30-year, fixed-rate loans crossed the 6% threshold last week, according to Freddie Mac's weekly Primary Mortgage Market Survey.
Last week’s survey reported 30-year mortgages averaging 6.01% for the seven-day period ending on Thursday, March 24. That was their highest level since the week ending July 29, when they were 6.08%. Rates were on the rise last year through the spring and into mid-summer before they started to decline.
This year, mortgage rates have been rising slowly but steadily since early February.
Freddie Mac Chief Economist Frank Nothaft attributed the most recent rise in mortgage rates to renewed concern over the threat of inflation, but he also noted that the cost of housing finance remains at “very affordable” levels.
“This would explain why new home sales figures were surprisingly high in February,” Nothaft said. “Although mortgage rates are beginning to rise, we have yet to experience much of a slowdown in the housing market.”
The Mortgage Bankers Association reported last week that home loan application activity fell in response to rising mortgage rates. Its overall index was off 9.5%, with refinancing activity falling 16.5% and demand for purchase loans declining 3.5%.
NAHB is forecasting that long-term mortgages will average 6.4% in this year’s final quarter. One-year adjustable rate mortgages, which rose to 4.24% last week, are projected to average 4.9% in the final three-month period of this year.
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