Mortgage rates have increased for the third consecutive week, reaching 6.90% in the week ending February 22, according to data from Freddie Mac. This marks a significant rise from the previous week's average of 6.77% and a year-on-year increase from 6.50%. The market has seen smaller movements in mortgage rates over the past two months following a decrease from last year's high of 7.79% in October.

Economic and inflation data have led to a re-evaluation of monetary policy, resulting in the upward trend of mortgage rates. The Federal Reserve's indications that it will not cut its benchmark rate until later this year have also played a role in these increases. The housing market, which had seen improved affordability with rates hovering near 6.6%, is now facing challenges as rates inch closer to 7%.

Federal Reserve officials have hinted at potential rate cuts in 2024 but are not rushing into decisions without concrete evidence of sustained improvement in inflation. The upcoming March meeting of the Federal Open Market Committee is expected to provide more insights into the Fed's approach.

While new listings in housing markets have increased by 9.5% compared to last year, mortgage applications have dropped by 10.6% in the week ending February 16. Many potential homebuyers are hesitant due to the recent uptick in mortgage rates, disrupting their plans amidst expectations of lower rates. Analysts suggest that the market may slow down as buyers navigate these changing conditions.