Mortgage Rates Drift Closer To The 7% Mark

Mortgage rates inched higher to the dreaded 7% level, according to the latest Primary Mortgage Market Survey from Freddie Mac (OTCQB: FMCC).

The 30-year fixed-rate mortgage averaged 6.88% as of April 11, up from last week when it averaged 6.82%. A year ago at this time, it averaged 6.27%.

The 15-year fixed-rate mortgage averaged 6.16%, up from last week when it averaged 6.06%. A year ago at this time, it averaged 5.54%.

“Mortgage rates have been drifting higher for most of the year due to sustained inflation and the reevaluation of the Federal Reserve’s monetary policy path,” said Sam Khater, Freddie Mac’s chief economist. “While newly released inflation data from March continues to show a trend of very little movement, the financial market’s reaction paints a far different economic picture. Since inflation decelerated from 9% to 3% between June 2022 and June 2023, the annual growth rate of inflation has remained effectively flat, ranging from 3.1% to 3.7% and averaging 3.3%. The March estimate of 3.5% annual growth is in the middle of that range.”

“However,” Khater added, “the market’s reaction was dramatically different, as illustrated by a significant drop in the Dow Jones Industrial Average post-announcement. It’s clear that while the trend in inflation data has been close to flat for nearly a year, the narrative is much less clear and resembles the unrealized expectations of a recession from a year ago.”