Mortgage Rates Climb To 7.2%, Highest Since November 2022
Mortgage Rates Climb To 7.2%, Highest Since November 2022...
U.S. mortgage rates surged to 7.2% this week, hitting their highest level in over three years and squeezing homebuyers already struggling with record-high prices. The jump, reported by Freddie Mac on Thursday, marks the fourth consecutive weekly increase as stubborn inflation delays expected Federal Reserve rate cuts.
The 30-year fixed-rate mortgage rose from 6.9% last week, crossing the psychologically significant 7% threshold for the first time in 2024. Economists attribute the spike to stronger-than-expected March jobs data and rising Treasury yields, with the 10-year note briefly touching 4.5% on Wednesday.
"This is a gut punch for spring buyers," said Lawrence Yun, chief economist at the National Association of Realtors. The rate hike adds $200 to monthly payments on a $400,000 loan compared to December 2023 rates. Redfin reports mortgage applications dropped 12% week-over-week as affordability worsens.
The surge comes during peak homebuying season, with inventory remaining 34% below pre-pandemic levels. Zillow data shows the typical U.S. home now costs $358,734, requiring 41% of median income for payments at current rates - the highest burden since 2007.
Federal Reserve Chair Jerome Powell acknowledged the housing crunch Wednesday but signaled no imminent rate relief, saying policymakers need "greater confidence" inflation is cooling. Markets now expect just two Fed cuts in 2024, down from six projected in January.
Builder stocks like Lennar and PulteGroup fell 3-4% Thursday on the rate news, while refi-dependent lenders Rocket Mortgage and UWM Holdings dropped over 5%. The Mortgage Bankers Association revised its 2024 origination forecast downward by $100 billion to $1.8 trillion.
First-time buyers like Denver teacher Marissa Cortez told CNBC she's pausing her search: "At these rates, even a condo pushes my budget to the breaking point." The White House announced new down payment assistance programs this week, but housing experts say only significant rate drops or price corrections will restore affordability.
Analysts warn the rate spike could prolong the housing freeze, with existing home sales stuck near 30-year lows. CoreLogic's Selma Hepp notes: "We're seeing the worst affordability conditions in a generation, and it's changing what 'starter home' means for millions."
