Many Americans have been priced out of purchasing a home or making a move for years now amid elevated mortgage rates, sky-high home prices, and squeezed budgets due to inflation.
Despite the Federal Reserve cutting interest rates by 50 basis points last month, mortgage rates continue to climb. But why? The average rate on the benchmark 30-year fixed mortgage surged to 6.44% from last week’s 6.32%, according to Freddie Mac’s latest Primary Mortgage Market Survey which was released on Thursday. The average rate on a 30-year loan was 7.63% a year ago. The Fed doesn’t set mortgage rates, it only influences them, according to Norada Real Estate Investments.
The economy plays a huge factor in mortgage rates as well. It might sound counterintuitive, but if the economy is doing well, this could actually lead to an increase in yields on Treasury bonds, which could also mean an increase in mortgage rates, Norada said.Supply and demand is a contributor. There are many homeowners who don’t want to sell their house because they got it at such a great pre-pandemic mortgage rate, according to Investopedia.
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