Mortgage rates edged up slightly this week, according to data from Freddie Mac’s Primary Mortgage Market Survey released on Thursday. The average rate for a standard 30-year fixed mortgage rose to 6.11%, up from 6.10% the previous week. This rate, however, is significantly higher than the 6.89% average recorded a year ago.
Freddie Mac’s chief economist, Sam Khater, pointed out that despite this small increase, the 30-year fixed-rate mortgage has remained at one of the lowest levels seen in years. He remarked that the combination of improved affordability and increased availability of homes is encouraging for both buyers and sellers as they approach the spring home sales season.
Additionally, the average rate on a 15-year fixed mortgage has also seen a rise, now sitting at 5.5%, compared to 5.49% last week.
Realtor.com Senior Economist Anthony Smith explained that the minimal adjustments in the mortgage rate are correlated with the recent decisions made by the Federal Reserve to maintain interest rates. This has sparked renewed focus on policy credibility and investor expectations, especially following the nomination of former Fed Governor Kevin Warsh as the potential next Fed chairman.
While mortgage rates are not directly influenced by the Fed’s actions, they are affected by long-term yields, which fluctuate with economic conditions, market sentiment, and perceived risks. Smith emphasized that uncertainties regarding the Fed’s objectives could lead long-term yields to rise even in periods of rate cuts, highlighting the complex interplay between political actions and monetary policy.
Smith also noted that the overall affordability of homes is bolstered by low inflation rates and a stable job market. Coupled with wage growth, these factors enhance household purchasing power. He remarked that families looking to purchase homes, whether first-time buyers or those considering relocation, benefit from consistent price stability and income growth. A Fed that is viewed as effectively achieving its dual goals of price stability and maximum employment is vital for sustained housing affordability in the long run.