The average rate on 30-year fixed mortgages reached 7.04% Monday, topping 7% for the first time since December, following a rosy monthly manufacturing report. Prior to that, the rate saw a steep rise Friday on the heels of the January jobs report.
“The rapid increase in rates over the past two days is actually not too surprising given the fact that the market was widely seen as overly optimistic on the Fed rate cut outlook,” said Matthew Graham, chief operating officer at Mortgage News Daily. Rates are unlikely to drop below 7% again “if we see more data like last Friday’s jobs report.”
However, “if inflation comes in cooler than expected, it could balance the outlook,” he said.
Michael Fratantoni, chief economist at the Mortgage Bankers Association, noted that the job market will be a positive influence on spring home sales, with higher household incomes supporting purchases.
