Mortgage rates climbed for the fourth consecutive week in a row, jumping to the highest level recorded since December 2023.
The average rate on a 30-year mortgage rose to 6.94% in the week ending Feb. 29, up from 6.90% the previous week, according to data released Thursday by mortgage buyer Freddie Mac. A year ago, the rate for a 40-year loan was 6.65%.
While the rate is down from a peak of nearly 8% in the fall, it remains sharply higher than the lows of 3% during the COVID-19 pandemic.
"Mortgage rates continued their ascent this week, reaching a two-month high and flirting with seven percent yet again," Sam Khater, Freddie Mac's chief economist, said in a statement.
Khater noted that the rising mortgage rates have dampened tentative homebuyer momentum heading into the spring.
"The recent boomerang in rates has dampened already tentative homebuyer momentum approaching the spring, a historically busy season for homebuying. While sales of newly built homes are trending in a positive direction, higher rates and elevated prices continue to pose affordability challenges that may leave potential homebuyers on the sidelines," Khater added.
Why Are Mortgage Rates Increasing Again?
Mortgage rates reached a 20-year high of 7.79% in October and have fallen in the months after. It hovered around 6.6% for more than a month in December. However, rates began trending higher again as the Federal Reserve seemingly has no plans of cutting its benchmark lending rate until later this year.
The Fed does not set interest rates that borrowers pay on mortgages directly. However, their cuts and hikes influence them, per CNN.
In addition to the higher-than-expected inflation rate, a strong job market is keeping pressure on mortgage rates. Housing inventory is also 34.3% lower than the typical amount before the pandemic, Fox Business reported, citing data from Realtor.com. This has pushed home prices higher.
That being said, news listings of US homes for sale increased by 12.9% in the four weeks ending Feb. 25, hitting 79,354, per data from Redfin. That is the sharpest spike in nearly three years.
READ NEXT: Housing Market Forecast: Here's What Homebuyers Can Expect Once Mortgage Rates Drop
