Economists say even minor movement in borrowing costs will continue to have an impact on housing activity.
After weeks of declines, the interest rate for a 30-year mortgage reversed course, jumping to a 6.39% average this week, Freddie Mac reports. “For the first time in over a month, mortgage rates moved up due to shifting market expectations,” says Sam Khater, Freddie Mac’s chief economist. “Home prices have stabilized somewhat, but with supply tight and rates stuck above 6%, affordable housing continues to be a serious issue for many potential home buyers. Unless rates drop into the mid-5% range, demand will only modestly recover.”
The sweet spot may be 5.5%—a threshold that 71% of prospective buyers say they’re unwilling to cross, according to a recent study by John Burns Real Estate Consulting. The National Association of REALTORS® forecasts that mortgage rates will drop below 6% by the end of the year.
The lift in mortgage rates this week comes after some calming in the banking sector, says Nadia Evangelou, NAR’s senior economist and director of real estate research. After recent bank closures, the economy has faced a lot of uncertainty. “Mortgage rates are expected to continue to fluctuate in the coming months, affecting both housing affordability and sales activity,” Evangelou says.
Freddie Mac reports the following national averages with mortgage rates for the week ending April 20:
- 30-year fixed-rate mortgages: averaged 6.39%, rising from last week’s 6.27% average. A year ago, 30-year rates averaged 5.11%.
- 15-year fixed-rate mortgages: averaged 5.76%, rising from last week’s 5.54%. Last year at this time, 15-year rates averaged 4.38%.
Source: nar.realtor
