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Illustration by Lanette Behiry/Real Estate News

Higher mortgage rates could mean a 'nobody's market' this spring  

Mortgage interest rates climbed again this week, with the daily rate approach levels not seen since November.

February 23, 2023
3 minutes

Key points:

  • Freddie Mac’s weekly survey shows 30-year-fixed-rate mortgages averaged 6.5%, up from 6.32% a week earlier.
  • Mortgage applications were down 13.3% week-over-week, suggesting that buyers are in retreat.
  • "Even with this increase, owning a home is still affordable for Americans if they can put 20% down," said Nadia Evangelou, NAR senior economist.

Mortgage interest rates rose again this week, putting a damper on earlier hopes that they might decline enough to entice buyers this spring.

The Freddie Mac survey put the average 30-year fixed-rate mortgage at 6.5%, a meaningful jump from last week's 6.32%.

The strength of the economy, a tight labor market and the threat of sticky inflation led to the increase, said Sam Khater, Freddie Mac's chief economist. He noted that there's a wide range of rates that financial institutions are offering right now, which means homebuyers could save money if they shop around.

Mortgage News Daily indicates that the daily 30-year fixed rates are hovering even higher at just above 6.8%.

Jiayi Xu, an economist for, said many companies are continuing to tighten their belts in preparation for an economic downturn. This uncertainty heading into the spring could create a "nobody's market," which Xu described as one that isn't friendly to buyers or sellers.

"Mortgage rates are likely to move in the 6% – 7% range over the next few weeks, which continues to pose a significant challenge to affordability," Xu said.

The rise in interest rates led to another big drop in mortgage applications. The number of new applications declined 13.3% for the week ending Feb. 17 compared to a week earlier, according to data from the Mortgage Bankers Association

This is typically the time of year when mortgage applications ramp up, said Joel Kan, MBA's deputy chief economist. 

"The increase in mortgage rates has put many homebuyers back on the sidelines once again, especially first-time homebuyers who are most sensitive to affordability challenges and the impact of higher rates," Kan said.

Still, there's reason for optimism. "Even with this increase, owning a home is still affordable for Americans if they can put 20% down," said Nadia Evangelou, NAR senior economist and director of real estate research. "The monthly mortgage payment is $1,880 for a median-priced home. Despite higher mortgage rates, the homeownership rate rose in 2022."

And if rates drop below 6%, as some economists are projecting, "more Americans will likely become homeowners, boosting the homeownership rate this year as well," said Evangelou.

The increase in interest rates comes at a time when Americans are taking on significant debt, including mortgages, tapping into home equity and credit cards. According to the New York Federal Reserve, household debt rose to $16.9 trillion, with credit card debt hitting pre-pandemic highs.

Balances on home equity lines of credit (HELOC) increased by $14 billion. It's the third consecutive quarterly increase and the largest increase seen in more than a decade, according to the report.

The 15-year fixed-rate mortgage also continued to rise. It averaged 5.76% this week, up from last week when it averaged 5.51%.

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