Washington, DC (CNN) Mortgage rates rebounded again this week after falling for two weeks in a row.
The average 30-year mortgage rate was 6.39% in the week ended May 18, up from 6.35% in the previous week, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed interest rate was 5.25%.
Sam Khater, chief economist at Freddie Mac, said economic currents have kept prices within a 10 basis point range for the past several weeks.
“While affordability remains an obstacle, homebuyers are getting used to current prices and continue to seek home ownership,” Khater said.
Mortgage rates topped 5% for the first time since 2011, slightly more than a year ago, and stayed above 5% for all but one week over the past year. Since then, it has risen to 7.08%, last reaching in November.
Over the past month, prices have gone up and down, but remain below 6.5%.
“Mortgage rates have remained in the roughly 6%-7% range over the past eight months and are likely to stay in that range until incoming economic data makes the economy’s path forward clearer,” said Hannah Jones, economic data analyst with Realtor.com. . “Buyer demand has been sensitive to the ebbs and flows of mortgage rates, but near-peak home prices and high inflation mean many potential buyers are still waiting on the sidelines.”
The average mortgage rate is based on the mortgage applications Freddie Mac receives from thousands of lenders across the country. The survey only includes borrowers who have given a 20% decrease and have excellent credit.
Inflation is falling, but uncertainty about debt limits looms
Mortgage rates rose after a rally in 10-year Treasury notes this week, as investors continue to digest data on inflation and keep an eye on The ongoing confrontation in Washington About raising the debt limit, which is create uncertainty.
While inflation is calming, recent data shows signs of a stubborn economy, though it is slowing, Jones said, suggesting that rate hikes by the Fed had the intended effect. However, inflation remains well above the central bank’s target level and unemployment remains near an all-time low.
If no agreement is reached to extend the debt limit, the United States will default on its debt for the first time. This could crush an already ailing housing market, sending the cost of buying a home up 22% and soaring Mortgage rates of more than 8%according to a single projection.
“The economy remains on shaky footing, and a default in the US will lead to higher interest rates that could erase any progress toward a healthier housing market through a deepening in home sales,” Jones said.
Default is still not likely, but, Jones said, the closer we get to when a potential event happens — which might be Coming soon on June 1st – Without increasing the debt limit, more families will be hurt by higher interest rates.
“The sooner the debt crisis is resolved, the less likely it will negatively affect households already suffering from rising prices,” she said.
Buyers remain rate sensitive
Home shoppers facing higher mortgage rates also face lower inventory of homes to buy and strong competition from other buyers, particularly at entry- and mid-range prices. Although home sales are down, the demand for a few homes coming to market in an area can be met lead to a bidding war It pushes prices up.
This makes buyers more price sensitive, as they calculate how much home they can afford.
“High rates and low inventory levels continue to keep many potential first-time buyers on the sidelines,” said Bob Broxsmith, president and CEO of the Mortgage Bankers Association. “Applications for FHA loans—popular with many beginners—are down 5% from last week and 17% from a year ago.”
Inventory is low because many homeowners who might put their home on the market hold back and keep the mortgage rate several percentage points below the price they would get by purchasing another home.
“Restrained buyers and reluctant sellers mean the spring market hasn’t gained as much momentum as it did in years past, but every improvement in affordability is offset by an increase in buyer activity,” Jones said. “Prices are likely to remain high in many markets as lower inventory, especially at a reasonable price point, creates a competitive environment.”
“Unapologetic reader. Social media maven. Beer lover. Food fanatic. Zombie advocate. Bacon aficionado. Web practitioner.”
Sequoia separates the arms of China and India from the American mothership
61 cryptocurrencies are now considered securities by the Securities and Exchange Commission
Stocks Drop, Oil Barely Budges After Saudi Production Cut: Stock Market News Today