If one were to shake a Magic 8 ball, the answer to the question of “where are mortgage interest going to be in the next month?” would now read “outlook not so good.” Yesterday’s inflation figures, unfortunately, rose to 3.5%, which reverses the trend of lowering inflation. While yesterday showed a higher CPI reading and a jump in the 10-year treasury (the highest since November), the weekly average of mortgage interest rates remained in the mid-6% range at 6.88% as it has not yet fully factored in the jump. In the coming weeks, mortgage interest rates are likely to increase, which is disappointing news for Spring home buyers.
For a $400,000 home with a 10% down payment, the typical mortgage payment would be $2,366, which is out of reach for many Americans. While first-time buyers do not have housing equity to assist in their home purchase, those who have earned housing equity through home price appreciation are the current winners in today’s housing market. One-third of recent home buyers did not finance their home purchase last month—the highest share in a decade. For these buyers, interest rates may be less influential in their purchase decisions.
