The 30-year fixed rate mortgage remained at its highest level since last November, increasing by 8 basis points from the prior week on the Federal Reserve’s aggressive posture on the economy, Freddie Mac said.
Its Primary Mortgage Market Survey found the 30-year FRM at an average 6.73% for the seven days ended March 9, up from 6.65% one week prior and 3.85% one year ago.
At the same time, the 15-year FRM climbed 6 basis points on a week-over-week basis, to 5.95% from 5.89%. For the same week in 2021, this product averaged 3.09%.
For the past week, yields on the benchmark 10-year Treasury have flirted with the 4% mark but have not closed above that level since March 2 at 4.07%. The yield dropped the following day to 3.96%. Since then, the 10-year has been relatively flat; as of 11:25 a.m. Thursday morning, it was 3.97%.
“Mortgage rates continue their upward trajectory as the Federal Reserve signals a more aggressive stance on monetary policy,” said Sam Khater, Freddie Mac’s chief economist in a press release. “Overall, consumers are spending in sectors that are not interest rate sensitive, such as travel and dining out.”
However, housing has been adversely affected by the Fed’s stance as enumerated by Chairman Jerome Powell in his Senate testimony on Tuesday. “As a result, would-be homebuyers continue to face the compounding challenges of affordability and low inventory,” Khater said.
Speculation is that at the next Federal Open Market Committee meeting a 50 basis point increase in the Fed Funds rate is likely. At its last session, the FOMC had pulled back to a 25 basis point hike after a series of 50 basis point hikes last year.
According to Zillow’s rate tracker, the 30-year fixed was at 6.78% on Thursday morning, up 8 basis points from Wednesday and an increase of 10 basis points compared with one week prior.
“Despite no major changes to economic conditions, Federal Reserve Chair Powell indicated in his remarks to Congress that the next rate hikes could be higher than what investors are currently anticipating,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans in a statement issued Wednesday night. “The data dependent Fed is reacting to the strong January labor market and disappointing inflation data.”
That data dependency is creating policy uncertainty and a more volatile macro environment in the minds of investors, Divounguy continued.
A key data point is the recent Job Openings and Labor Turnover Survey, which showed more employment listings than seekers, resulting in wages failing to cool down in any meaningful way, making Friday’s Bureau of Labor Statistics report something for mortgage rate predictors to keep an eye on.
“With the Fed firmly focused on wage growth, the upcoming February employment report could cause more policy uncertainty and higher mortgage rate volatility,” Divounguy said. “Cooling wage growth in this week’s jobs report could send mortgage rates back down.”
Source: nationalmortgagenews.com