Mortgage rates inched up again following weeks of decline as the economy continued to show signs of recovery, according to Freddie Mac.
The average rate for a 30-year fixed-rate mortgage rose to 6.12% for the week ending Feb. 9, according to Freddie Mac's Primary Mortgage Market Survey. This was an increase from the previous week when it averaged 6.09% but the rate remained significantly higher than last year when it was 3.69%.
The average rate for a 15-year mortgage was 5.25% this week, up from 5.14% the week before and up from 2.93% last year.
The increase comes after a stronger-than-expected jobs report and an indication that the Fed will continue to raise interest rates, albeit at a slower pace, according to Freddie Mac Chief Economist Sam Khater.
However, the increase isn't likely to dampen homebuyer demand as the market has largely anticipated that mortgage rates were likely to fluctuate between 6% and 7%, according to Realtor.com
"The 30-year fixed-rate continues to hover close to six percent, and interested homebuyers are easing their way back to the market just in time for the spring homebuying season," Khater said.
If you are looking to take advantage of lower mortgage rates by refinancing your mortgage loan, or are ready to shop for the best rate on a loan, consider visiting an online mortgage broker like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
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Inflation rose 6.5% year-over-year in December, reflecting the lowest level in over a year, according to the latest Consumer Price Index (CPI) report.
The Federal Reserve has responded by slowing the pace of interest rate increases as it looks to bring inflation to a 2% target. Last week, the Fed announced a 25-basis point rate increase.
Still, a more robust than anticipated jobs growth in January indicates an exceedingly tight labor market and is expected to give the Fed reason to keep with its restrictive policy stance for longer than markets anticipate. The latest employment report from the Bureau of Labor Statistics (BLS) showed that the economy added 517,000 jobs last month.
"The disinflationary process, the process of getting inflation down, has begun and it's begun in the goods sector, which is about a quarter of our economy," Federal Reserve Chair Jerome Powell said at an event hosted by The Economic Club of Washington, D.C. "But it has a long way to go. These are the very early stages."
If you are ready to shop for a mortgage loan or are considering refinancing your loan to take advantage of lower mortgage rates, you can use the Credible marketplace to help you compare interest rates from multiple mortgage lenders and get prequalified in minutes.
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Applications for a mortgage to purchase a home rose 7.4% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.
Refinance demand made the biggest move, up 18% from the previous week, but it was still 75% lower than the same week one year ago. The refinance share of mortgage activity increased to 33.9% of total applications from 31.2% the previous week.
"Mortgage rates have declined for five consecutive weeks and are a full percentage point lower than the October 2022 peak," MBA President and CEO Bob Broeksmit said. "Lower rates continue to boost borrower demand, with mortgage applications for both refinances and home purchases increasing last week.
"Affordability – especially at the lower end of the market – continues to be a challenge, but MBA expects purchase demand to continue to recover heading into the spring," Broeksmit continued.
If you are ready to shop for a mortgage loan or are looking to refinance an existing one, you can use the Credible marketplace to compare rates and lenders and get a mortgage preapproval letter in minutes.
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