After seven weeks of declines, mortgage rate averages edged slightly higher last week, according to Freddie Mac.
As of Thursday, the 30-year, fixed-rate mortgage average was up to 6.65% on a weekly basis, according to the mortgage giant, a buyer of loans from banks. Though it’s a break from the recent trend, the average is still much lower than the beginning of the year, when it peaked at 7.04%.
The update comes on the heels of data about inflation that was released yesterday. Though the report showed that price growth is lower than expected, it left investors wary that there could be upward pressure on prices in coming months. Because of that, daily mortgage rates ended Wednesday higher, increasing to 6.82%, according to Mortgage News Daily.
It’s the highest daily rate for a 30-year, fixed mortgage since the end of February, but it’s not as bad as it looks, according to Matthew Graham, chief operating officer of Mortgage News Daily.
“Context paints a softer picture,” he wrote in a blog post, noting that the past two weeks in the mortgage market were “the best two weeks we've seen since early October.”
Daily rates are generally more reactive than weekly averages, too, so they are more likely to reflect even the slightest volatility, like data about inflation or the job market.
Moreover, taking an even bigger-picture look, the 30-year, fixed-rate average is lower than it was during the comparable week last year. Put another way, if a homebuyer purchased a $400,000 house with no down payment last year, they’d be paying about $533,000 in interest over the term of their mortgage. For that same purchase today, a buyer would pay about $524,000 in interest over the 30 years.
From the Homes.com Blog: How Much House Can I Afford?
The 15-year, fixed-rate average, popular with homeowners looking to refinance to a lower rate, also increased slightly, climbing to 5.8% from 5.79%, according to Freddie Mac. Mortgage News Daily’s measure showed that rate was slightly higher than the previous day, at 6.24% as of Thursday afternoon.
Homebuyers haven't been deterred
Aside from a few daily outliers, the general trend in mortgage rates over the past few weeks has drawn more homebuyers into the market.
Applications for mortgages increased more than 11% in the week ended March 7 compared to the previous week, according to the latest data. It’s the second week of growth after a 20% surge in activity last week.
The uptick was driven by weekly and annual growth in the number of homebuyers applying to purchase houses and the number of homeowners applying to refinance their mortgage for a lower rate.
At the same time, the spring homebuying season, historically the busiest time for the housing market, is kicking in. It has created a one-two punch for prospective buyers hoping to purchase a home, and that trend is expected to continue, according to Bob Broeksmit, CEO and president of the Mortgage Bankers Association.
“The six-week decrease in mortgage rates to lows last seen in October has been good news for the mortgage market,” he said in a statement Thursday. “MBA expects borrower demand to hold steady this spring as long as mortgage rates continue to move lower.”