Published by REALTOR.com | April 18, 2024
These higher rates are frustrating homebuyers and sellers, thwarting many of their plans.
Mortgage rates are back up above 7%.
Even worse, rates could rise further after U.S. Federal Reserve Chair Jerome Powell said policymakers were in no rush to cut rates while inflation remains stronger than anticipated.
Mortgage rates averaged 7.1% in the week ending April 18, according to Freddie Mac. That was up from 6.88% in the previous week. And it’s the first time rates have been above 7% since early December.
“It really triggers a sense of helplessness,” says licensed therapist Julia Baum, who practices in New York City and San Diego. “A lot of people feel stuck and trapped against their will into certain living situations.”
Every additional point increase is a little more financially—and psychologically—painful for buyers.
“A 6% means something very different than a 7%. It bears more weight,” says Baum. “Even if it’s 6.9% versus 7%, it means something different to people.”
When mortgage broker Rocke Andrews began seeing rates top 7% last Friday, he immediately became concerned about the impact on potential borrowers.
“When rates go up, people hunker down and don’t spend,” says Andrews, of Lending Arizona in Tucson. “They’ve been told for so long that rates are coming down, so they just postpone.”
Others might no longer qualify for loans or will be able to qualify only for smaller loans, he says.
If inflation remains high, mortgage rates could climb to 8%, says Realtor.com® Chief Economist Danielle Hale.
As mortgage rates typically follow the same trajectory as the Fed’s rates, they’re expected to remain elevated until inflation falls and the Fed announces rate cuts.
