Mortgage Rates Climb Past 7% for the First Time in 2024

Mortgage rates in the United States climbed to the highest level since November 2023 this week, as higher-than-expected inflation readings have dashed hopes of the Fed starting to cut rates soon. According to Freddie Mac, the average rate for a 30-year fixed mortgage increased to 7.10 percent in the week ended April 18, making it difficult for many would-be homebuyers to afford a house.

Along with the Fed's aggressive rate hikes, mortgage rates have climbed by almost 4 percentage points since the beginning of 2022, threatening to push more and more potential buyers out of the market, especially as high rents and other costs of living make it increasingly difficult to save for a significant down payment.

Making things even more difficult, high mortgage rates don't just affect the demand side of the market. Supply is also constrained as prospective sellers stay put to avoid taking out a new mortgage at a much higher rate than their current one. This in turn has kept home prices elevated, or at least kept them from fully reflecting the significantly higher mortgage rates compared to two years ago.

"When rates go up, people hunker down and don’t spend," mortgage broker Rocke Andrews told Realtor.com. "They’ve been told for so long that rates are coming down, so they just postpone." And they made need a little more patience. Earlier this week, Fed chair Jerome Powell said that policymakers were in no rush to cut rates, making it unlikely for mortgage rates, which tend to follow the same trajectory as the Fed's policy rate, to come down meaningfully anytime soon.