The 30-year average mortgage rate rose to 7.19% this week from 7.18% the week before, according to Freddie Mac.
The increase comes after the Federal Reserve on Wednesday signaled its benchmark interest rate will remain higher for the near future.
Mortgage rates have played a major role in today’s unusual housing market. Many buyers have retreated due to high borrowing costs, while many homeowners refuse to sell their homes because they currently have a much lower rate.
“Mortgage rates that doubled last year have brought housing affordability to 40-year lows and throttled supply,” Orphe Divounguy, Zillow’s senior economist, said in a statement, “As if buyers didn’t have enough problems, volatility in rates this year has made it difficult to plan and budget for a mortgage payment.”
On Wednesday, the Fed released updated forecasts that suggest the fed funds rate will stay high for longer – possibly through 2026 – after the central bank maintained the current range between 5.25% and 5.5%. The Fed also indicated that another quarter-point hike could be on the way this year.
“With market expectations coalescing around the idea of ‘tighter for longer’ monetary policy, the Fed’s updated outlook offered telling clues,” Danielle Hale, Realtor.com’s chief economist, said. “The 2023 year-end projection (benchmark rate) remains at 5.6%, meaning that another rate hike before year’s end is not only on the table, it is consistent with the median viewpoint.”
While fixed mortgage rates don’t directly track the Fed’s rate, they do follow the yield on the 10-year Treasury, which has risen alongside the central bank’s rate hikes. That means mortgage rates could increase further.
Click here to read the full report from Rebecca Chen at Yahoo Finance.
