Graph of three of houses growing upwards
Illustration by Lanette Behiry/Real Estate News

A fifth week of rising mortgage rates dampens hopes for a busy spring 

Freddie Mac’s weekly survey reported yet another jump in the average 30-year mortgage rate, which is approaching its 2022 peak.

March 9, 2023
3 minutes

Key points:

  • The average rate this week is 6.73%, up from 6.65% last week.
  • Mortgage rates may continue to trend upward in conjunction with expected hikes to the federal funds rate.
  • Home prices are holding steady, eking out small year-over-year gains.

Mortgage rates rose again this week, which may "subdue buyer activity just as the calendar says the spring housing market should be ramping up," said Bright MLS Chief Economist Lisa Sturtevant.

According to Freddie Mac's weekly survey, the average rate for a 30-year fixed-rate mortgage was 6.73% this week, up from 6.65% last week. It's the fifth week in a row of rising rates.

During remarks to Congress on Wednesday, Federal Reserve Chair Jerome Powell suggested the Fed may raise interest rates more aggressively to curb inflation. The Fed last raised rates by a quarter point on Feb. 1, but hinted at a half-point jump ahead. The Fed has raised the federal funds rate eight times since March 2022.

"If the totality of the data were to indicate that faster tightening is warranted, we'd be prepared to increase the pace of rate hikes," said Powell, who noted that a strong job market has kept inflation up despite eight rate hikes since March 2022. While the Fed does not set mortgage rates, its policy actions generally influences the direction of those rates. 

Even as mortgage rates creep toward their 2022 high, which exceeded 7%, home prices are holding steady as inventory remains tight. "While prices are down from their summer 2022 peak levels across much of the country, the National Association of REALTORS reported that the January median home price nationally was up 1.2%, compared to a year ago. In some local markets, prices are still rising at near double-digit rates," said Sturtevant.

Buyers hoping for a more typical spring buying season may continue to put their home purchase on hold. "If mortgage rates continue to rise, this could be a slower-than-expected spring market. The biggest impact will be felt among first-time homebuyers, who have been competing against cash and repeat buyers throughout the pandemic and are still facing the one-two punch of high home prices and rising mortgage rates," said Sturtevant.

Despite the continued rate increases, mortgage applications were up in the latest weekly survey from the Mortgage Bankers Association (MBA) — but still well below 2022 levels. 

"Even with higher rates, there was an uptick in applications last week, but this was in comparison to two weeks of declines to very low levels, including a holiday week. Comparing the application indices from a year ago, purchase applications were still down 42 percent, and refinance activity was down 76 percent. Many borrowers are waiting on the sidelines for rates to come back down," said Joel Kan, MBA's vice president and deputy chief economist.

The 15-year fixed-rate mortgage averaged 5.95%, up from 5.89% a week ago.

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