Mortgage Rates Move Up for the Fifth Week in a Row

Mortgage rates jumped for a fifth consecutive week as Federal Reserve Board Chair Jerome Powell and other FOMC members indicated that the central bank will continue its aggressive monetary policy to fight inflation.

Freddie Mac reported that the average rate on a 30-year, fixed-rate conforming home loan (up to $726,200) was 6.73%, up from 6.65% a week ago. That's the highest it's been since early November when it hit a two-decade high of 7.08%. After that November peak, rates declined, dipping to 6.09% in early February, the lowest level in five months, before climbing again.

Freddie Mac Chief Economist Sam Khater explained that consumers are still spending in sectors that aren't as sensitive to interest rates, such as travel and dining out. However, those that are impacted by higher borrowing costs, such as housing, are being adversely affected by the Fed's moves. He said that, "As a result, would-be homebuyers continue to face the compounding challenges of affordability and low inventory."

Limiting Home Sales

That's putting a crimp on home purchases. The National Association of Realtors (NAR) reported earlier that sales of existing homes fell for the 12th consecutive month in January because of high prices and mortgage rates.

Nadia Evangelou, NAR senior economist and director of real estate research, warned that borrowing costs could go even higher, depending on upcoming reports on jobs and inflation. However, she added that it may still be a good time to buy a home as rates are considered to be historically low even at these levels.