Mortgage rates are inching up, with the 30-year fixed-rate loan increasing to a 6.5% average this week, Freddie Mac reports. Homeownership remains attainable for Americans who can afford a 20% down payment and a monthly mortgage payment of $1,880 on a median-priced home, says Nadia Evangelou, senior economist and director of real estate research at the National Association of REALTORS®.
“The economy continues to show strength, and interest rates are repricing to account for the stronger than expected growth, tight labor market and the threat of sticky inflation,” says Sam Khater, Freddie Mac’s chief economist. “Our research shows that rate dispersion increases as mortgage rates trend up. This means home buyers can potentially save $600 to $1,200 annually by taking the time to shop among lenders to find a better rate.”
Freddie Mac reported the following national averages in mortgage rates for the week ending Feb. 23:
- 30-year fixed-rate mortgages: averaged 6.50%, rising from last week’s 6.32% average. Last year at this time, 30-year rates averaged 3.89%.
- 15-year fixed-rate mortgages: averaged 5.76%, increasing from last week’s 5.51% average. A year ago, 15-year rates averaged 3.14%.
Buyers Are Trying to ‘Time’ the Market
Real estate professionals have clung to a certain phrase when reacting to higher mortgage rates: “Marry the house, date the rate.” Potential home buyers shouldn’t think twice about purchasing a property due to higher mortgage rates, says Brandon Snow, executive director at Ally Home.
“There is no cookie-cutter solution to the perfect time to buy a house, and consumers who try to time the market often lose out,” Snow says. “If you can comfortably afford the down payment, mortgage and additional payments, don’t let today’s rates hold you back. There will be a better scenario down the road, where you can refinance and secure a lower rate. We also expect to see a more normalized market this year, with fewer bidding wars amid today’s high-rate environment—and that could be good news for potential home buyers staying in the market.”Further, mortgage rates are projected to stabilize below 6% in the second half of the year, Evangelou adds. That could prompt more Americans to become homeowners. But despite higher mortgage rates, there were about 1.6 million more homeowners nationwide in 2022 than the previous year, Evangelou adds, citing the latest data. “Even though many buyers were priced out due to historic low affordability, more Americans were able to become homeowners,” she says. She says she expects that as rates fall over the coming months, the homeownership rate could see another boost this year.