Mortgage rates jump to highest level since March
An extremely hot reading on inflation and the government’s Producer Price Index (PPI) early Wednesday sent bond yields higher, followed by home loan rates. Rates had already risen earlier this week on news of more problems in negotiations over the Iran war.
The average rate on the popular 30-year fixed mortgage rose to 6.57% on Wednesday, according to Mortgage News Daily. It is now 15 basis points higher than last Friday and is at the highest level since March, when falling rates due to the start of the war reversed.
Wednesday’s increase was much smaller than the jump after another inflation report, the Consumer Price Index, was released on Tuesday.
“Overall, PPI is not as important an issue as CPI,” said Matthew Graham, chief operating officer of Mortgage News Daily. “Bonds also foresee a corrective decline after the war is over.”
The move comes as the spring market, which stalled in March, is finally starting to see new life. The National Association of Realtors said data from Sentrilock, which provides lockboxes used by real estate agents on properties for sale, showed home showings recorded in April were up 8% year-over-year. An increase was seen in all four regions of the country.
Some of the new demand is due to cooling house prices. Nationally, they’re still higher than they were a year ago, but not by much. And then there’s supply.
“Inventory hasn’t recovered yet, we’re still 11-12% below where we need to be,” said Andy Walden, head of mortgage and housing market research for ICE, a mortgage technology company.
Walden also noted that the latest increase in interest rates was about 40 basis points higher than in February. But mortgage rates were close to 7 percent this time last year.
“If you look at what this means for buying electricity in the market, it’s about a 4% drop from the level in February,” he said. “We are more affordable than last year, but not as affordable as at the beginning of this year.”
