Mortgage Rates Edge Up, but Expected to Stay Stable

The latest data on mortgage rates suggests that they will remain near their current levels in the near future, despite a slight increase for the second consecutive week. According to Freddie Mac, the average 30-year fixed mortgage rate this week was 6.66%, a slight rise from the previous week's 6.62%, but still significantly lower than the high of 7.79% recorded at the end of October.

This slight increase in mortgage rates may come as good news for prospective home buyers who are planning to enter the market this spring. Sam Khater, Freddie Mac's chief economist, stated that this decrease in rates has marginally boosted buyer demand. However, there is a downside to this situation, especially if there continues to be a shortage of homes available for sale. Khater pointed out that the combination of increased demand and tight inventory has been causing home prices to rise faster than incomes, making affordability a major challenge for buyers. He advised potential home buyers to explore existing state and local resources, such as down payment assistance programs, which can help offset closing costs.

While home buyers may have been hopeful for more favorable mortgage rates in the near term, the reaction to inflation data from a key mortgage rate benchmark suggests that they might have to wait longer. The initial release of the Consumer Price Index caused the 10-year Treasury yield, which often influences mortgage rates, to rise slightly, but it has since fluctuated between modest gains and losses.

As of early afternoon, the yield stood at 4.044, up by a slight 0.003 percentage point. This development also impacted builder stocks, with the iShares U.S. Home Construction exchange-traded fund experiencing a 0.4% decrease.

Overall, while mortgage rates have experienced a modest increase, they are expected to remain stable in the near future. Despite the potential waiting period for more favorable rates, home buyers should consider alternative resources and programs to help overcome the challenges posed by rising prices and affordability concerns.