US Mortgage Rates Rise to 7.03%

US Mortgage Rates Rise to 7.03%

Isabella Delgado
2 min read

US Mortgage Rates See Slight Increase, Affecting Homebuyers and Refinancers

US mortgage rates have experienced a marginal uptick, climbing to 7.03% from 6.94%, breaking a three-week decline, as reported by Freddie Mac. This surge is impacting both homebuyers and refinancers, potentially adding hundreds to monthly payments and contributing to a 13% decline in refinancing activity. The elevation is attributed to solid US business activity and a constrained labor market, which have deferred expectations for Federal Reserve rate reductions. This development occurs amidst a challenging housing market characterized by high prices and limited inventory, culminating in a slowdown in home sales during the typically bustling spring season. Economists prognosticate that if inflation and economic expansion continue to decelerate, mortgage rates could plummet to 6.5% by the conclusion of 2024.

Key Takeaways

  • US mortgage rates surged to 7.03% from 6.94%, marking the first increase in four weeks.
  • Escalating borrowing costs and restricted inventory are stifling housing demand, with contract signings at a four-year low.
  • Economists anticipate a potential decrease in mortgage rates to 6.5% by the end of 2024 if inflation and economic growth slacken.
  • The upsurge in mortgage rates has led to a 13% decline in refinancing activity and a downturn in purchasing activity.
  • The housing market confronts challenges posed by exorbitant prices and tight inventory, influencing the spring homebuying season.


The recent upturn in US mortgage rates, propelled by robust business activity and a tight labor market, instantaneously impacts homebuyers and refinancers, amplifying monthly expenditures and diminishing refinancing by 13%. Coupled with soaring housing costs and limited inventory, this situation dampens the spring homebuying season. In the long term, if inflation and economic expansion diminish as anticipated, rates may plummet to 6.5% by year-end, potentially alleviating market pressures. Nevertheless, this shift could also indicate economic deceleration, impacting broader financial instruments and investor confidence.

Did You Know?

  • Freddie Mac: A US government-sponsored enterprise (GSE) that acquires mortgages on the secondary market, consolidates them, and vends them as mortgage-backed securities to investors. This process aids in supplementing the money supply accessible to lenders for mortgages.
  • Federal Reserve rate cuts: Measures implemented by the Federal Reserve to reduce the federal funds rate, which is the interest rate at which depository institutions, such as banks, lend reserve balances to other depository institutions overnight. Diluting this rate typically encourages banks to obtain funds from the Federal Reserve, augmenting the money supply and potentially lowering interest rates for consumers and businesses.
  • Mortgage-backed securities (MBS): Financial securities delineating a claim on the payments of mortgage loans, encompassing principal and interest, by a pool of mortgages to the holders of the securities. These are constituted when lenders consolidate mortgages and vend them to investors, thereby assisting lenders in freeing up capital to facilitate more loans.

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