By Connie Kim | Housingwire
The mortgage industry has been on a roller coaster ride this year due to a resilient economy. In the span of a month, mortgage rates shot up near 7% after dropping to the low 6%-levels.
“The economy continues to show strength, and interest rates are repricing to account for the stronger than expected growth, tight labor market and the threat of sticky inflation,” said Sam Khater, Freddie Mac’s chief economist.
The latest economic data, including thejob market, consumer spending — which remained robust — and inflation numbers, which displayed unexpected staying power, led investors to bet that theFederal Reserve will continue to raise its federal funds rate through the summer.
Even before these data were released, minutes from the Jan. 31-Feb. 1 Fed officials’ meeting showed that they needed to do more to wrestle rapid inflation back to 2%.
“With inflation still well above the committee’s longer-run goal, participants generally noted that upside risks to the inflation outlook remained a key factor shaping the policy outlook, and that maintaining a restrictive policy stance until inflation is clearly on a path toward 2% is appropriate from a risk management perspective,” the minutes, released on Wednesday, said.
The 10-year Treasury yields, which act as a benchmark for mortgage rates, rose to 3.93% on Wednesday, up from the previous week’s 3.81%.
Following the climb in the 10-year Treasury yield, the Freddie Mac fixed rate for a 30-year loan also continued to rise.
The 30-year fixed-rate mortgage rose again to 6.5% as of February 23, up 18 basis points from the previous week’s 6.32%, Freddie Mac’s latest survey showed. Rates were at 3.89% a year ago this time.
Just about three weeks ago, Freddie Mac’s mortgage rates dropped to 6.09% — despite the Fed’s hawkish tone to keep inflation at a target of 2%.
At HousingWire’s Rate Center, the Optimal Blue data showed rates at 6.64% on Wednesday, up compared to 6.48% the previous week. Mortgage News Daily showed rates were at 6.88% as of Wednesday, up one bps from the previous day.
