According to Mortgage News Daily, the average rate on the popular 30-year fixed mortgage has climbed to 7.5%, marking its highest level since mid-November of last year. This surge in mortgage rates has concerned both buyers and sellers in the housing market, as it may impact affordability and potentially slow down sales activity.

The rise in mortgage rates can be attributed to various factors. Last October, rates reached their highest level in decades, leading to a significant slowdown in home sales. However, builders intervened by buying down rates for their customers, enabling them to outperform existing home sellers. The rates then dropped to the mid-6% range through mid-January, resulting in a surge in home sales. Unfortunately, the downward trend was short-lived, as rates began to rise again.

Danielle Hale, chief economist for Realtor.com, commented on the recent inflation concerns that have driven the increase in mortgage rates. She stated, "By mid-February, a pick-up in inflation reset expectations, putting mortgage rates back on an upward trend, and more recent data and comments from Fed Chair [Jerome] Powell have only underscored inflation concerns." This situation is expected to have an impact on sales data in the coming months, reflecting the influence of higher mortgage rates.

Despite the higher rates, there was a 5% increase in mortgage applications for home purchases last week compared to the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. However, demand remains 10% lower than the same period last year, even with rates now 70 basis points higher. Joel Kan, MBA's chief economist, suggested that some borrowers may have decided to act quickly in case rates continue to rise.

Affordability is a growing concern with the rising rates, especially as supply in the housing market remains low, although slightly higher than a year ago. This scarcity of inventory has led to increased competition among buyers, resulting in faster movement of homes. As for those waiting for rates to drop significantly, it seems they may have to wait longer, as recent economic data indicates a strong economy and job market, likely keeping mortgage rates elevated for the near future.

Bob Broeksmit, MBA's president and CEO, highlighted the strength of the economy and job market, stating that it is likely to sustain the current elevated rates. As a result, prospective homebuyers will have to carefully consider their options and potential impact on affordability in the housing market.

Overall, the current trend in mortgage rates reaching their highest level in months is expected to impact the housing market, potentially slowing down sales and challenging affordability for prospective buyers.