The average rate for a 30-year fixed-rate mortgage rose last week, exceeding four percent for the first time since May 2019, according to Freddie Mac’s weekly survey of rates. We continue to see inflation climb and thus rates are expected to do the same.
No one likes to see mortgage rates rising, however, there are some benefits in this overheated housing market. First, we’re likely to see the blistering rise in home prices level off and demand may cool off some as well, alleviating the difficulty many buyers have been having. Homeownership remains a great place to be and prices are still rising slower than rental prices and so the increases in rates over the coming months will likely help lots of those that have been wanting to purchase have a better shot at it.
And what about mortgage rates going forward? Fed Chairman Powell spoke publicly to economists this week emphasizing the Fed’s commitment to “take the necessary steps” meaning further rate hikes, to curb inflation, but as we know, it will take some time to turn the ship around. And as the Fed continues to increase its rates, we’re likely to see mortgage rates continue to rise over the course of this year as well.
As for the housing market, it remains strong with home purchase demand moderating some, but inventory remains low and demand is still high. We will see a couple important reports on housing in the coming days.
The first will be the New Home Sales numbers for February. Sales have been holding up despite rising mortgage rates. After January’s annual rate of 801,000 unit sales, forecasters see February steady and firm at 810,000.
On Friday we’ll get a look at Pending Home Sales numbers, a leading indicator of the health of the housing market. After three straight sharp and unexpected declines, pending home sales in February are expected to rebound 0.9 percent.
And speaking of leading indicators, the report on Durable Goods Orders, considered a leading indicator of the health of the manufacturing sector, comes out later this week. Durable goods orders have been surging, up 1.6 percent in January following gains of 1.2 and 3.2 percent in the two prior months. For February, forecasters are calling for a 0.5 percent decline.
Of course, traders are still watching the effects of the Russian-Ukrainian conflict on global markets, and bonds and stocks are reacting daily, adding to the continued volatility.
I’ll be keeping an eye on all of it for you! Please reach out for all of your home financing. I’m here to help and advise you.
P.S. We have an exciting announcement!! We have opened a branch in Colorado! As you may know, Colorado is where I was born and raised so my roots here are deep and we are so excited to now be able to offer full-service home financing in my home state! So, please spread the word to your friends and family and as always you can reach me on my website (www.pacfimortgage.com), or by calling/texting 818.307.6072, or replying to this email. I look forward to serving you in Colorado!
