Mortgage Rates Rise Further Above 7%, Buyers Readjust

NAR economist says buyers shouldn’t expect rates to fall for some time.
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With mortgage rates rising to 7.17% this week, according to Freddie Mac, home buyers are forced again to readjust their budgets. Buyers have had to digest more than one jump in borrowing costs this month.

Jessica Lautz, deputy chief economist at the National Association of REALTORS®, says consumers shouldn’t expect those dynamics to change in the short-term. “The bottom line for spring home buyers is that mortgage interest rates may show little dramatic downward movement any time soon,” she says.

At this week’s average, borrowers face a monthly mortgage payment of $2,436 when purchasing a $400,000 home with a 10% down payment, Lautz says. “While this monthly payment is out of reach for many consumers, those with housing equity may offset the higher price and interest rate with a larger down payment,” she adds. “Pending homes did move up on a monthly basis in the Northeast, South and West, which underlines the fact that home buyers move when life changes happen.”

Indeed, mortgage rates have risen more than half a percent since the first week of the year, yet purchase demand remains mostly steady, adds Sam Khater, Freddie Mac’s chief economist. “With rates staying higher for longer, many home buyers are adjusting, as evidenced by this week’s report that sales of newly built homes saw the biggest increase since December 2022,” he notes.

Freddie Mac reports the following national averages with mortgage rates for the week ending April 25:

  • 30-year fixed-rate mortgages: averaged 7.17%, rising from last week’s 7.1% average. Last year at this time, 30-year rates averaged 6.43%.
  • 15-year fixed-rate mortgages: averaged 6.44%, increasing from 6.39% last week. A year ago, 15-year rates averaged 5.71%.