Mortgage rates are now expected to stay above 6% until the fourth quarter of the year 2025, according to a government-backed organization.
In February, government-backed organization Fannie Mae forecasted that the average rate for a 30-year fixed mortgage would drop to 5.9% by the end of 2024. However, the firm renewed its forecast this month and said it now expects rates to hit 6.4% by the end of this year and only gradually decline to a flat 6% by the fourth quarter in 2025.
"Financial markets are now pricing in lower odds of aggressive fed funds rate cuts this year, leading to some upward drift in the mid-to-longer range of the interest rate curve, including mortgage rates," the firm wrote in its report.
In addition, Fannie Mae noted that for the 30-year fixed-mortgage loan specifically, rates are expected to average 6.6% in 2024 and 6.2% in 2025. The rates were upgraded to four-tenths and five-tenths, respectively.
In the week ending March 21, mortgage rates for the 30-year fixed-term loan rose to 6.87%, up from 6.74% the previous week and 6.42% the same week in 2023.
Mortgage rates for the 15-year fixed-term loan also rose this week to 6.21% from last week's 6.16%. In 2023, the mortgage rate for the 15-year fixed-term loan was 5.68%.
How Is the Housing Market Responding?
Despite soaring mortgage rates, existing home sales picked up in February to the highest level recorded in a year.
Existing home sales-which make up most of the housing market and include single-family homes, townhouses, condo units, and co-ops-rose by 9.5% last month from the prior month to a seasonally adjusted annualized rate of 4.38 million, according to a new report from the National Association of Realtors.
That marked the second straight month of rising sales and it was the largest monthly increase recorded since February 2023, the report noted.
At the same time, the median national price of an existing home rose by 5.7% in February from a year earlier. The median national price is now $384,500, the highest median home price for any February on record.
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