Purchase mortgage rates jumped 14 points this week after three consecutive weeks of declines, according to Freddie Mac.
The Freddie Mac Primary Mortgage Market Survey reported that purchase mortgage rates averaged 5.23%, compared to 5.09% the week prior. A year ago at this time, 30-year fixed rate purchase rates were 2.96%.
“After little movement the last few weeks, mortgage rates rose again on the back of increased economic activity and incoming inflation data,” said Sam Khater, Freddie Mac’s chief economist.
Khater said the housing market is extremely rate-sensitive at the moment which is why rates increased suddenly as demand has softened.
“The material decline in purchase activity, combined with the rising supply of homes for sale, will cause a deceleration in price growth to more normal levels, providing some relief for buyers still interested in purchasing a home,” Khater said.
Corelogic reported earlier this week that home prices grew by 20.9% year-over-year.
Higher mortgage rates are expected to slow buyer demand in the coming months, causing annual home price appreciation to cool to 5.6% by April 2023.
According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 4.38% which is up an average of 0.8 points, up from last week’s 4.32%. A year ago, the 15-year fixed-rate mortgage averaged 2.23%.
The 5-year ARM averaged 4.12%, with buyers on average paying for 0.3 point, up from 4.04% the week prior. ARM’s averaged 2.55% a year ago.
Zillow Vice President of Capital Markets Paul Thomas said rates were pushed up by a variety of data points in the economy.
“Payroll and unemployment data showed labor markets remain extremely tight," Thomas said. "Manufacturing and services activity data were strong, but delivery delays suggested continued supply-chain issues. Comments from Federal Reserve members signaled that their primary concern is addressing inflation. Consumer spending remained high, potentially easing near-term recession concerns from investors. Based on all these data points, markets moved to price back in more Federal Reserve tightening, driving rates higher last week."
Thomas added that the markets will focus on the Consumer Price Index data later this week "for further readings on inflation and any potential impacts that could have on Federal Reserve policy.”
