Mortgage rates are rising again

Mortgage rates are rising again.

The 30-year fixed rate rose to 6.36 percent last week from 6.14 percent a week earlier, according to data from the Mortgage Bankers Association released Wednesday. This slowed demand for mortgages, leading to a 5.1% weekly drop in the volume of mortgage applications.

“Following stronger economic data last week, including the September jobs report, mortgage rates rose, with the 30-year fixed rate rising to 6.36 percent — the highest since August,” it said Mike Fratantoni, senior vice president of the Mortgage Bankers Association. and Chief Economist.

hiring increased previous estimates last month the US economy added 254,000 jobs. The unemployment rate also fell 0.1 percentage points from August to 4.1%.

The news calmed fears of an overcooled economy, particularly on employment, and solidified economists’ forecasts for a smaller 25 basis point rate cut at the next Federal Open Market Committee meeting .

Despite the Federal Reserve’s big interest rate cut last month, the housing market probably won’t see a boost anytime soon. For starters, affordability continues to be a challenge for most potential buyers. The median US home sale price in August was $432,849, according to Redfin (RDFN) data. That’s a 3% increase from a year ago and largely within reach for typical Americans.

Many existing homeowners are also staying put – especially when it comes to “blocking” effect. for holders of mortgage loans which hit low rates in 2020 and 2021. This also put pressure on housing supply.

“As I’ve pointed out before, the decision to buy a home is influenced by many factors, not just the level of mortgage rates,” Fratantoni said. “The biggest constraint for many potential homebuyers over the past year has been a lack of inventory.”

While overall loan volume and refinancing applications fell last week, the Mortgage Bankers Association’s purchase index – a measure of demand for mortgages used to buy a home – rose 0.1% from the previous week and up 8% from last year. Fratantoni said this is a sign that some buyers are continuing to move forward, given that mortgage rates are still considerably lower than last year’s highs.

“There are now more homes available in many markets across the country, and with mortgage rates still low compared to recent history, at least some potential homebuyers are moving forward,” he said.

Goldman Sachs (GS) warned last week that there is “limited space” for further major declines in the mortgage rate. The investment bank cut its forecasts for the 30-year conforming mortgage rate at the end of 2024 and 2025 to 6.0% and 6.05%, respectively, from a previous forecast of 6.5% and 6, 1%

“We think the decline in mortgage rates has largely run its course,” Goldman economists said.