By Jennifer Epstein | Bloomberg
Mortgage rates in the US extended their upward climb.
The average for a 30-year, fixed loan was 6.73%, the highest since November, when borrowing costs hit 7.08%, Freddie Mac said in a statement Thursday.
After easing a bit at the start of the year, rates have now increased for five straight weeks, threatening to chill the housing market in what’s usually its busiest season. First-time buyers are getting sidelined as higher loan costs erode their purchasing power. Many current homeowners, meanwhile, are staying put — reluctant to settle for a discounted sale price or trade in a cheap mortgage for a more expensive one.
“Consumers are spending in sectors that are not interest-rate sensitive, such as travel and dining out,” Sam Khater, Freddie Mac’s chief economist, said in the statement. But with the Federal Reserve signaling a more aggressive stance on monetary policy, “rate-sensitive sectors, such as housing, continue to be adversely affected.”
In testimony to Congress this week, Fed Chair Jerome Powell said the central bank is prepared to return to a faster pace of interest-rate hikes if economic indicators keep coming in hot. Policymakers will wait for fresh jobs and inflation data before deciding on the size of this month’s increase, Powell said.
Mortgage borrowers are already looking at rates that are significantly higher than they were last March. Payments on a $600,000 loan would be $3,884 a month, up from $2,813 a year ago, when the 30-year average was 3.85%.
For now, the Fed is focused on February’s employment report, due Friday. Signs of cooling wage growth could send 10-year Treasury yields — and the mortgage rates that generally track them — back down, said Orphe Divounguy, an economist at Zillow.