The 30-year fixed-rate mortgage (FRM) averaged 6.73% this week, its fifth-straight week of increases and edging upwards of 7%, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.73% as of March 9, 2023, up from last week when it averaged 6.65%. A year ago at this time, the 30-year FRM averaged 3.85%.
- 15-year fixed-rate mortgage averaged 5.95%, up from last week when it averaged 5.89%. A year ago at this time, the 15-year FRM averaged 3.09%.
What the experts are saying:
“Mortgage rates continue their upward trajectory as the Federal Reserve signals a more aggressive stance on monetary policy,” said Sam Khater, Freddie Mac’s chief economist. “Overall, consumers are spending in sectors that are not interest rate sensitive, such as travel and dining out. However, rate-sensitive sectors, such as housing, continue to be adversely affected. As a result, would-be homebuyers continue to face the compounding challenges of affordability and low inventory.”
Realtor.com economist, Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year loan continued to rise toward 7%, jumping from 6.65% last week to 6.73%. While last month Fed officials said that a smaller increase in the federal-fund rates would help create a soft landing for the economy, Powell’s testimony on Tuesday made it clear that the central bank is prepared to return to a faster pace of rate increases if the incoming February economic indicators remain strong.
Although investors have been talking about the possibility of faster rate hikes based on January’s data, the stock market saw a sharp decrease on Tuesday, following Powell’s statement. This suggests that investors were not fully prepared and are anxious about the Fed’s upcoming actions. Uncertainty about how high rates will go and how long they will remain elevated makes it challenging for investors to make well-informed decisions. Therefore, it’s crucial to keep a close eye on the latest developments from the Federal Reserve.
While the current housing market may not look promising for sellers due to factors such as an increasing number of unsold homes, longer time on market, and decelerating price growth driven by high mortgage rates, there are still opportunities to be found. For example, recent sales data show that the share of first-time homebuyers is up compared to one year ago. As a result, sellers with starter homes may see robust demand and retain some bargaining power. In addition, the widespread implementation of hybrid working models provide employees more flexibility to choose where to live, allowing them to avoid expensive and congested urban centers. Consequently, this trend could make homes with easy access to public transportation systems more attractive to home buyers, which in turn, enhances bargaining power for the sellers. Furthermore, for sellers who are also buyers, it is important to note that they can still leverage their record-high equity, even if they have to adjust their expectations to lower asking prices,” Xu concluded.
