The recent market news, including Federal Reserve Chair Jerome Powell’s announcement that there will be no rate cuts in the near future due to the strength of the U.S. economy, has caused mortgage rates to continue their steady rise.
According to HousingWire’s Mortgage Rates Center, the average 30-year fixed rate for conventional loans increased from 7.26% to 7.48% in one week, and from 6.54% a year ago. The 15-year fixed rate also rose from 6.66% to 6.72% in the same time period. Despite this increase in mortgage rates, the housing market remains robust, with demand for new homes seeing an impressive 8.8% increase from February to March and currently boasting a total of 543,000 single-family homes on the market – a 3% increase from just last week and a whopping 31% increase compared to last year.
One interesting development resulting from this rise in mortgage rates is an increase in unsold home inventory on the market, as stated by Mike Simonsen, founder and president of Altos Research. However, there is one positive note about these rising mortgage rates: the spread between mortgage rates and the 10-year Treasury yield is narrowing which is a good sign as it suggests that borrowers are becoming more comfortable with higher interest rates on mortgages as compared to other investment options available in the market .
Looking ahead, important information on the Fed’s strategy regarding benchmark interest rates will be released when Personal Consumption Expenditures Price Index for March comes out on Friday.