Mortgage rates rose this week, pushing them further away from 6% and weighing on homebuyer confidence as the spring selling season approaches.
According to Freddie Mac, the 30-year fixed mortgage rate increased to 6.32% from 6.12% the previous week. Rates had been flirting with 6% in recent weeks and were nearly three-quarters of a point lower than in mid-November, when the rate was approaching 7%.
However, the recent increase eroded some of the newly acquired purchasing power, dampening spirits. For many homeowners, the small window for refinancing has also closed.
“In terms of home buying, elevated rates certainly are a deterrent for potential homebuyers,” Keith Gumbinger, vice president of HSH.com, told Yahoo Finance. “Still-high home prices combined with relatively high mortgage rates have crushed affordability.”
According to Fannie Mae, the number of Americans who believe now is a good time to buy fell to 17% in January from 21% in December. When interest rates were slightly higher than 3% a year ago, roughly 59% of respondents thought it was a good time to buy.
“Potential buyers remain quite sensitive to current mortgage rates, which are more than two percentage points higher than last year’s levels and have significantly reduced buyers’ purchasing power,” Joel Kan, deputy chief economist at the Mortgage Bankers Association, said this week in a statement.
This was evident in the most recent index of homebuying activity.