Mortgage Rates Are Inching Closer To 7%. Rates Are Up 13 BPS In Less Than 24 Hours. Is There Really A Recession Coming?

Mortgage rates are inching closer to 7% and here is why. Economic data indicates that the economy has remained resilient. This is despite the Federal Reserve tightening monetary policy and raising rates. 

Mortgage rates appear to have been rising after the jobs report came back solid. The report showed retail sales beat expectations and the confidence of homebuilders is rising. In other words, economic data that has been pretty solid.

The down side is  that inflation continued to climb well above the Fed’s target. Inflation is currently at an annual rate of 6.4%. In addition, total nonfarm payroll employment rose 517,000 jobs from December and retail spending increased 3%. This is the largest monthly gain in nearly two years. Meanwhile, builder confidence in the market for newly built single-family homes rose seven points in February.

Positive economic indicators were enough for the 30-year fixed-rate to rise again to 6.32% as of Feb. 16. This is up 20 basis points compared to the previous week.

Other indexes show mortgage rates that are even higher. Mortgage Daily News reports rates were at 6.75% as of mid-day on Thursday, up 13 basis points compared to the previous day. 

Economists believe that mortgage rates may rise to the 7% level soon amid the stronger-than-expected U.S. economic performance, adding more affordability challenges to the housing market. The last time rates were at 7% was in November 2022.

Industry insiders estimate mortgage rates will go as high has 7.25% with the 10-year yield at 4.25%. 

However, the rate of inflation will may soften as the year moves on. Real rent inflation data looks like it will more in line with current market data.

Rising rates, however, tend to bring affordability challenges. 

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