Mortgage rates creeping back up toward 7%

Mortgage rates have popped back up to near 7% — 6.91% was the average reported by Freddie Mac last week. 

Bạn đang xem: Mortgage rates creeping back up toward 7%

In May 2024, mortgage rates shot above 7% before falling back close to 6% in late summer in anticipation of the Federal Reserve starting to cut interest rates. But home-borrowing costs have been climbing higher again since early October.

Mortgage rates have been rising on expectations that the Federal Reserve will keep interest rates higher this year to fight inflation, per Lawrence Yun, chief economist at the National Association of Realtors.

Xem thêm : GS Mortgage raises $308 million in MBS, backed by prime collateral

There’s also concern “about whether or not the Trump administration is looking to privatize Fannie Mae and Freddie Mac,” he said. That, he noted, would lead to higher borrowing costs.

Yun predicts mortgage rates will settle in 2025 at what he calls a “new normal”: around 6% to 6.5%. That’s one factor that could encourage more existing homeowners to sell, said Skylar Olsen, chief economist at Zillow.

“People get divorced, they get married, they have kids, they lose a partner. And all these things precipitate major moves that unlock them from their low rates into the more modern housing market,” she said.

And that modern housing market remains very challenging for all but the luckiest first-time buyers, per Lawrence Yun.

Xem thêm : Here’s how mortgage lenders are thinking about AI in 2025

“Young people who are fortunate to get some help from mom and dad or extended family for downpayment can get into the market,” he said.

But many moderate-income and minority households without intergenerational wealth to rely on cannot.