Mortgage rates climb again, approaching 7%

Mortgage rates marched higher this week, nearing 7% with no relief in sight for the sluggish housing market.

Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage rose to 6.88% this week from 6.82% last week. The average rate on a 30-year loan was 6.27% a year ago.

The average rate on the 15-year fixed mortgage jumped to 6.16% from 6.06% last week. One year ago, the rate on the 15-year fixed note averaged 5.54%.

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"Mortgage rates have been drifting higher for most of the year due to sustained inflation and the reevaluation of the Federal Reserve’s monetary policy path," said Sam Khater, Freddie Mac’s chief economist. "While newly released inflation data from March continues to show a trend of very little movement, the financial market’s reaction paints a far different economic picture."

Khater added, "It’s clear that while the trend in inflation data has been close to flat for nearly a year, the narrative is much less clear and resembles the unrealized expectations of a recession from a year ago."

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The combination of persistently elevated rates and record-high home prices has left the housing market stalled for months, as many would-be buyers and sellers remain on the sidelines waiting for affordability to improve.

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Hopes that the Fed would cut rates in June were dashed this week when the Labor Department reported inflation rose again in March, and economists expect mortgage rates to remain elevated through the rest of the year.