Mortgage rates rise after 3 weeks of decreases

Following three straight weeks of decreases, mortgage rates started climbing again, pushed upward by steadying economic data, according to Freddie Mac. 

The 30-year fixed-rate mortgage average jumped 14 basis points to 5.23% for the weekly period ending June 9, according to Freddie Mac’s Primary Mortgage Market Survey. One week earlier, the rate came in at 5.09%, while in the same seven-day period a year ago, it stood at 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 Freddie Mac Chief Economist Sam Khater in a press release.

Employment data released over the past several days reflected a Goldilocks job market  — healthy, not too hot — some economists noted. Consumer spending remains robust, calming concerns of recession in the near term, and comments from Federal Reserve members indicated their priority is addressing ongoing inflation.

“Based on all these data points, markets moved to price back in more Federal Reserve tightening, driving rates higher last week,” said Paul Thomas, vice president of capital markets at Zillow, in a research blog post.

The latest surge in mortgage rates has led the housing market to slow further, according to Khater. The Mortgage Bankers Association reported origination volumes last week fell to lows not seen in more than two decades.

“The housing market is incredibly rate-sensitive, so as mortgage rates increase suddenly, demand again is pulling back,” he said. 

Investors have their eyes set on the latest inflation figures scheduled for release on Friday. Any unexpected data could play a large role in the direction mortgage rates head over the next week. 

“Both buyers and sellers have moved to the sidelines to see where the dust settles, which is fairly common in periods of high volatility and uncertainty,” said Robert Heck, vice president of mortgage at Morty, in a recent statement sent to National Mortgage News.

For consumers intent on buying, the available supply of homes should begin to grow, due to the decreased demand brought on by higher rates, but prices remain elevated and affordability challenged after a record stretch of growth over the past 12 months. Some relief may be coming, though.

“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,” Khater said.

The 15-year fixed rate average also saw an uptick over the past seven days, Freddie Mac reported, rising 6 basis points to 4.38% from 4.32% in the previous weekly period. One year ago, the rate came in at 2.23%.

After falling last week, the 5-year Treasury-indexed hybrid adjustable rate also headed upward to average 4.12%. The 5-year ARM came in at 4.04% the previous week and averaged 2.55% in the same time frame last year.