(Bloomberg) — Mortgage rates in the US rose to the highest level since mid-December, just as the housing market enters its key spring selling season.
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The average for a 30-year, fixed loan was 6.77%, up from 6.64% last week, Freddie Mac said in a statement Thursday.
Benchmark Treasury yields spiked this week after a hotter-than-expected inflation report spurred traders to push out bets on when the Federal Reserve might start cutting interest rates. The prospect of higher-for-longer borrowing costs may threaten to keep both buyers and sellers on the sidelines in the housing market’s busiest season, traditionally starting right after the Super Bowl.
Many current owners are holding onto sub-4% mortgages, reluctant to list their properties and trade up to more expensive loans. That’s led to a critically low supply of listings, especially for homes at the more-affordable end.
In the four weeks through Feb. 11, homebuyer contracts fell 7.3% from a year earlier, one of the biggest declines in about four months, Redfin Corp. reported Thursday. The brokerage’s demand index — measuring requests for tours and other services from Redfin agents — was down 18%. Sellers were more active, with new listings up 8% as owners looked to take advantage of rising prices.
Transactions should pick up in the coming months, “partly because it’ll be selling season and partly because people are getting more and more accustomed to elevated rates,” said Chen Zhao, Redfin’s economic research lead. “We expect mortgage rates to start declining later in the spring as inflation eases and the Fed finally starts cutting interest rates.”
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