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Mortgage rates are inching toward 7% after new data this week revealed a sensitive economy still coping with stubbornly high inflation. The 30-year fixed-rate mortgage now averages 6.88%, Freddie Mac reports.
“If one were to shake a Magic 8 Ball, the answer to the question of ‘where are mortgage interest rates going to be in the next month?’ would now read ‘outlook not so good,’” says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. “In the coming weeks, mortgage interest rates are likely to increase, which is disappointing news for spring home buyers.”
The mortgage market will take time to reflect the full impact of higher-than-expected inflation numbers released on Wednesday, which showed the CPI in March rose to 3.5%. In response to the latest inflation data, NAR Chief Economist Lawrence Yun said Wednesday that mortgage rates are likely to “cross above 7%.”
House hunters this spring likely will face higher borrowing costs, with 30-year rates already higher than they were a year ago. On a $400,000 home, with a 20% down payment, the typical monthly mortgage payment would be $2,366 at this week’s 6.88% mortgage rate, Lautz says. That may be enough to price out some home buyers this season, particularly first-timers who don’t have housing equity to leverage, she adds. “Those who have earned housing equity through home price appreciation are the current winners in today’s housing market.”
Freddie Mac reports the following national averages with mortgage rates for the week ending April 11:
- 30-year fixed-rate mortgages: averaged 6.88%, up from last week’s 6.82% average. Last year at this time, 30-year rates averaged 6.27%.
- 15-year fixed-rate mortgages: averaged 6.16%, rising from last week’s 6.06% average. A year ago, 15-year rates averaged 5.54%.
