The recent market news has led to an increase in mortgage rates, as announced by Federal Reserve Chair Jerome Powell. According to HousingWire’s Mortgage Rates Center, the average 30-year fixed rate for conventional loans increased to 7.48% from 7.26% the previous week and 6.54% a year ago, while the 15-year fixed rate also rose to 6.72% from 6.66% in the previous week. Despite this increase, the housing market remains robust with demand for new homes seeing an 8.8% increase from February to March and there are currently 543,000 single-family homes on the market, a 3% increase from the previous week and a 31% increase from last year.
One of the impacts of this rise in mortgage rates is that there has been an increase in inventory of unsold homes on the market according to Mike Simonsen, founder and president of Altos Research. However, there is a positive note about this as the spread between mortgage rates and the 10-year Treasury yield is narrowing which is a good sign as it indicates that borrowers may still find favorable financing options despite higher interest rates .
The release of Personal Consumption Expenditures Price Index for March on Friday will provide important information on Fed’s strategy regarding benchmark interest rates.