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Weekly Rate Jump
Mortgage rates surged this week to levels not seen in nearly four months, Freddie Mac reported Thursday. The benchmark 30-year fixed mortgage averaged 6.22%, up from 6.11% the prior week. A year ago, the average stood at 6.67%. The 15-year fixed rate also ticked higher to 5.54% from 5.5%.
The 30-year fixed-rate mortgage edged up this week to 6.22% but remains nearly half a percentage point lower than the same time last year. Potential homebuyers are poised for a more affordable spring homebuying season than last with the market experiencing improvements in purchase applications and pending home sales.
Influencing Factors
Rates are shaped by Federal Reserve policy, geopolitics, and more. Rising energy prices and trade tensions have boosted inflation expectations, exerting upward pressure on long-term rates despite softer economic indicators like 2.4% inflation and weaker job growth. The 10-year Treasury yield held around 4.27% Thursday.
Rising energy prices and renewed trade uncertainty have lifted inflation expectations, putting upward pressure on longer-term interest rates and, in turn, mortgage rates.
Fed's Position
Fed policymakers kept the federal funds rate at 3.5%-3.75% Wednesday, following steady holds after prior cuts. Labor market slowdowns, persistent inflation above 2%, and Middle East unrest factor into the pause. Chairman Jerome Powell noted the range is neutral and impacts from regional conflict remain unclear, with close monitoring ahead.
The current 3.5% to 3.75% range for the benchmark federal funds rate is within a range of neutral. It’s too soon to tell what the effect of the conflict in the Middle East will be on the economy, adding that policymakers will continue to monitor economic data as they consider adjusting monetary policy.
