Mortgage rates surpass 7%, reaching highest level in over a month

By Aarthi Swaminathan

Mortgage rates rise across the board, as Fed officials signal a 'patient posture on rate cuts,' industry group says

The numbers: Mortgage rates have surpassed 7%, hitting the highest level in over a month.

On the back of stronger-than-expected economic data on employment, expectations for the Federal Reserve to cut interest rates in the near term have dimmed, which pushed mortgage rates up to the highest level since early March.

But demand has held up somewhat by refinances. The market composite index - a measure of mortgage application volume - was up slightly in the past week, according to the Mortgage Bankers Association (MBA) on Wednesday.

The market index rose 0.1% to 195.7 for the week ending April 5 from a week prior. A year ago, the index stood at 229.5.

Key details: The purchase index - which measures mortgage applications for the purchase of a home - fell 4.7% from the previous week.

The refinance index, on the other hand, rose 9.9%.

The average contract rate for a 30-year mortgage for homes sold for $766,550 or less was 7.01% for the week ending April 5. That's up from 6.91% the week before.

The rate for jumbo loans, or the 30-year mortgage for homes sold for over $766,550, was 7.13%, up from 7.06% the prior week.

The average rate for a 30-year mortgage backed by the Federal Housing Administration was 6.8%, up from 6.74% the previous week.

The 15-year was up to 6.46% from 6.35% from the week before.

The rate for adjustable-rate mortgages was up to 6.41%, from 6.37% previously.

The big picture: The housing market is stuck between a rock and a hard place.

With mortgage rates back over 7%, more buyers will likely wait for a drop to buy. Until the Fed signals its intention to cut rates, affordability will remain strained due to high borrowing costs.

At the same time, a drop in rates could also boost demand enough that bidding wars return and push home prices up. So "lower interest rates don't necessarily improve housing affordability," economists at the Dallas Fed wrote in an analysis.

What the MBA said: "Mortgage rates moved higher last week as several Federal Reserve officials reiterated a patient posture on rate cuts," Joel Kan, vice president and deputy chief economist at the MBA, said in a statement.

While purchase applications were down to the lowest level since the end of February, refinance activity was up by 10%, he said, "driven particularly by [Veterans Affairs] refinance applications."

-Aarthi Swaminathan

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04-10-24 0700ET

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