The months-long trend of falling mortgage rates has come to an end, at least temporarily. After bottoming around 6.5%, Freddie Mac has reported a recent reversal.
"On the heels of consumer prices rising more than expected, mortgage rates increased last week,” said Sam Khater, Freddie Mac’s chief economist. “The economy has been performing well so far this year and rates may stay higher for longer, potentially slowing the spring homebuying season. According to our data, mortgage applications to buy a home so far in 2024 are down in more than half of all states compared to a year earlier.”
The 30-year fixed-rate mortgage averaged 6.77% as of February 15, 2024, up from the previous week when it averaged 6.64%. A year ago at this time, the 30-year rate averaged 6.32%.
The 15-year fixed-rate mortgage averaged 6.12%, up from the previous week when it averaged 5.90%. A year ago at this time, the 15-year rate averaged 5.51%.
Rising rates make it more difficult to find a house with an affordable mortgage payment. Lenders appear to have hiked rates in response to January’s hotter-than-expected Consumer Price Index (CPI), which means the Federal Reserve may keep rates higher for longer.
The jump in mortgage rates comes just as the spring homebuying season is set to get underway, timing that is bad for both buyers and sellers. But buyers may have some options.
What to do
If the seller is highly motivated, they may be willing to “buy down” the mortgage rates by “paying points” at closing. This was common practice in the 1980s and 1990s, when mortgage rates were high.
Most states offer some type of homebuying assistance. You can check your state here. Some of these programs offer down payment assistance, as well as educational resources to find the right loan.
In a rising interest rate environment, it also is critically important to shop around for the best mortgage with the best term. The best mortgage lenders offer a well-rounded approach for customers.
Competitive interest rates and fees, a variety of mortgage products, a straightforward process, and wide availability are a few of the qualities most helpful to homebuyers and those who are refinancing.
ConsumerAffairs has a buyer’s guide to help home buyers find the best lenders with the best rates.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-02-20 12:00:50
