Mortgage rates on 30-year fixed loans are expected to hit 5 percent for the average borrower today, per Mortgage News Daily. The latest retail sales data suggests that the impact of new tariffs may not be as powerful as previously anticipated.
Despite being the peak spring housing season, inventory at record lows, rising home prices, and now rates are limiting buyers' options. CNBC reports that higher rates tend to have a cooling effect on prices so that sellers can adjust to what buyers can afford, but Diana Olick writes that this isn't likely in the short-term. Says Sam Khater, chief economist at Freddie Mac, "the symbolic risk of a 5 percent mortgage, on top of higher gas prices, may cause a slowdown in homebuyer demand, particularly in western states and exurbs that are affected more by gas prices than the typical consumer."
"The bottom line is that the writing on the wall has been telling rates to go higher since at least last September," said Matthew Graham, chief operating officer of Mortgage News Daily. "Rates keep looking back to see if the writing has changed, and although there have been opportunities for hope (trade wars, stock selling-sprees, spotty data at times), it hasn't. Today is just the latest reiteration of that writing."