Mortgage rates rise as demand continues to slide

Mortgage rates increased slightly this week as demand continues to wane amid the ongoing housing affordability crisis.

Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage rose to 6.82% this week from 6.79% last week. The average rate on a 30-year loan was 6.28% a year ago.

At the same time, the average rate on the 15-year fixed mortgage ticked down to 6.06% after coming in last week at 6.11%. One year ago, the rate on the 15-year fixed note averaged 5.64%.

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"Since the start of 2024, the 30-year fixed-rate mortgage has not reached seven percent but has not dropped below 6.6 percent either," said Sam Khater, Freddie Mac’s chief economist.

"While incoming economic signals indicate lower rates of inflation, we do not expect rates will decrease meaningfully in the near-term," Khater added. "On the plus side, inventory is improving somewhat, which should help temper home price growth."

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The combination of persistently elevated rates and record-high home prices has left the housing market stalled for months.

The Mortgage Bankers Association reported Wednesday that purchase applications have fallen for three consecutive weeks, putting a damper on the typically busy spring season.

Many would-be buyers remain priced out of the market and have given up on making a purchase right now. Realtor.com's February 2024 Rental Report found it is now more affordable to rent than to buy a home in all 50 states.

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At the same time, many potential sellers are unwilling or unable to move due to the affordability crisis, as 90% of homeowners are locked in at lower rates.