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Interest rates have remained roughly flat for the past few weeks, but they could rise further if inflation proves to be more stubborn than expected.
Washington
CNN
—
Mortgage rates are trending higher this week and could rise further. America’s affordability crisis I haven’t given up.
The average interest rate on a 30-year fixed-rate mortgage for the week ending April 11 was 6.88%, up from 6.82% the previous week, according to Freddie Mac data released Thursday. A year ago, the average 30-year fixed rate was 6.27%.
Interest rates have been largely stable for the past few weeks, but if they do, they could rise further and surpass the uncomfortable psychological threshold of 7%. Inflation turns out to be more stubborn than expected.
The Federal Reserve does not directly set mortgage interest rates.But central bank actions will affect them, and higher-than-expected inflation readings could prevent central banks from cutting interest rates.
“Mortgage rates have been trending higher for most of this year due to sustained inflation and the Federal Reserve’s reassessment of its monetary policy direction,” Freddie Mac Chief Economist Sam Cater said in a release. He said: “Newly released inflation data from March continues to show little change; Financial market reaction It paints a much different economic picture. ”
Mortgage rates are tied to the benchmark 10-year Treasury yield, which moves ahead of Fed decisions. Yields rose above 4.5% on Wednesday, the highest level since November, after the latest consumer price index showed sustained price pressure in March. That doesn’t bode well for lower mortgage rates, and economists don’t expect them to fall below 6% this year, especially if the Fed doesn’t cut rates.
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But for now, officials still expect a rate cut at some point this year, which could happen. It was later than previously expected. That could relieve some of the pressure on the country’s tough housing market.
Mortgage rates are not expected to fall significantly this year, but affordability could improve if housing inventory improves further. This was announced by the National Association of Realtors. More homes hit the market in Februarywhich contributed to the increase in sales for the month.
Homeowners who had their mortgage rates locked in at low levels before the Fed began raising rates in 2022 have largely been unwilling to sell in recent years, contributing to the historic inventory shortage. . That may be starting to change.
The total housing stock in February was 1.07 million units, an increase of 5.9% from January. Inventories rose 10.3% in February compared to the same month last year, giving buyers more choice and helping to relieve some of the upward pressure on prices.
The housing shortage is a long-standing problem that keeps the U.S. housing market affordable and particularly frustrating for first-time home buyers.President Joe Biden announced suggestion Policies have been put in place to improve the health of the housing market, including tax credits and homebuilding efforts, but even if approved by Congress, it’s unclear whether they will be enough.
Despite recent improvements, and even with interest rate cuts as the Fed has indicated, the main problem remains that supply is not keeping up with demand, putting home buying out of reach for the majority of Americans. It’s where it’s not.
