Mortgage rates surpassed 7% for the first time this year, reflecting concern that interest costs could take longer to fall.
The 30-year-fixed-rate mortgage average hit 7.1% in the week ended April 18, according to Freddie Mac's weekly mortgage survey data. That's up from last week’s 6.88% and higher than the 6.39% in the comparable week in 2023.
At the same time, the 15-year fixed-rate mortgage averaged 6.39% — up from the previous week’s 6.16% and higher than the 5.76% for the comparable week in 2023.
Mortgage rates haven't been above 7% since early December.
Analysts largely expected mortgage rates to continue edging higher as the market grapples with recent data showing the economy remains more resilient than expected. That’s caused the Federal Reserve to change its plans — pushing back the timeline for anticipated federal funds rate cuts, a move that precedes a drop in mortgage rates.
“I don’t think that the trend in rates will be anything other than higher until we have a major shift in Fed policy,” Sean Salter, associate professor of finance at Middle Tennessee State University, said in a survey by personal finance website Bankrate.
The rise in rates has left potential homebuyers with a choice: act now in case rates keep climbing or keep waiting for rates to possibly wane. If potential homebuyers keep waiting, that could benefit apartment owners and investors as renters stay put longer.
“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year,” Sam Khater, chief economist at Freddie Mac, said in a statement. “Last week, purchase applications rose modestly, but it remains unclear how many homebuyers can withstand increasing rates in the future.”
Mortgage applications rose for the second consecutive week for the week ended April 17, according to the latest data from the Mortgage Bankers Association.
“Despite these higher rates, application activity picked up, possibly as some borrowers decided to act in case rates continue to rise,” Joel Kan, MBA vice president and deputy chief economist, said in a statement.
The bigger picture shows yearly and monthly growth, too, albeit at a slower pace than expected. In the 12 months ended in March, applications climbed 6.2%. On a monthly basis, applications grew 1% between February and March.
“March is typically a month when new home purchases see a seasonal boost,” Kan said. “Applications were still ahead of last year’s pace, but at 6%, the annual growth rate was the slowest since September 2023. Homebuyers remain adversely impacted by strong home-price growth and mortgage rates hovering around 7%.”