Despite recent stability in the mortgage market that has reduced pressure on borrowing costs, some prospective homebuyers still appear hesitant to strike.
The average weekly 30-year, fixed-rate mortgage fell slightly to 6.85% as of Thursday, according to mortgage giant Freddie Mac. Though the week-over-week decrease was minute — just a 0.02% change — it does represent the lowest average of the year. It also marks the fifth consecutive week of falling mortgage rate averages.
On a daily basis, that mortgage rate was similarly stagnant. As of Thursday morning, the figure was unchanged from the previous day at 7.02%, according to Mortgage News Daily.
The 15-year, fixed-rate mortgage also edged down as of Thursday, averaging 6.04% on a weekly basis, Freddie Mac said. On a daily basis, that rate for a 15-year fixed mortgage was down to 6.44%, lower than the previous day, according to Mortgage News Daily’s measure.
This week’s mortgage rate data comes during a relatively quiet week as far as economic data goes. Because the mortgage market is influenced by that data, the lack of news meant there’s no real catalyst for mortgage rates to fluctuate.
That stability could be short-lived, though. Next week, new data about price growth is set to be released, and that could change the Federal Reserve’s approach to policy. Though mortgage rates aren’t set by the Fed, they are influenced by the bond market that can fluctuate in response to Fed decisions.
Unconvinced consumers
The recent stagnation in the mortgage market is somewhat of a double-edged sword for consumers.
On the one hand, stability in the market could be a positive signal for potential buyers and sellers, according to Sam Khater, Freddie Mac’s chief economist.
“The 30-year fixed-rate mortgage has stayed just under 7% for five consecutive weeks,” he said in a statement Thursday. “This stability continues to bode well for potential buyers and sellers as we approach the spring homebuying season.”
At the same time, stable rates mean borrowing costs aren’t getting cheaper for buyers. Moreover, there’s still a degree of uncertainty about future economic data, especially with a new administration in the White House. That’s keeping some buyers and sellers sidelined.
Applications for mortgages fell to their lowest level since the start of the year in the week ended Feb. 14, according to the latest data from the Mortgage Bankers Association. The decrease came as “markets brushed off unexpectedly strong inflation data” from the week prior, the group’s vice president and deputy chief economist said in a statement.
“Many prospective homebuyers are waiting for supply and affordability conditions to improve meaningfully before jumping into the market,” the association’s president and CEO Bob Broeksmit said in a statement Thursday.
Whether that hesitation continues throughout the historically busy spring housing market remains to be seen. But market watchers and analysts said they don’t see any sharp declines in mortgage rates anytime soon, according to a survey from personal finance website Bankrate.
“While there are ongoing discussions about inflation and the Federal Reserve’s next moves, the current economic data suggests a period of stability,” said Anthony Kellum, president and CEO of Kellum Mortgage, said in the survey. “With mixed signals from labor markets and inflation reports showing gradual easing, I don’t anticipate a major shift in rates in the immediate term.”