Mortgage Rates Dip Below 6%, Then Accelerate Higher

Mortgage rates surged Friday, moving higher by .20 bps to 6.19% after Friday’s higher-than-expected jobs number, which showed more than a half-million hirings.

This spike offset a steady decline in rates over the past four weeks when home sellers seized their opportunities to come off the sidelines with new listings and pending sales both posting their smallest drops in four months that week prior, according to Redfin.

Prior to the surge, homebuyers holding a $2,500 monthly budget could afford a $400,000 home for the first time in four months as mortgage rates dip below 6% to 5.99%.

In other words, based on a 5.99% rate, buyers can afford to spend about $35,000 more on a home than they could have when rates peaked at over 7% in November.

Redfin economics research lead Chen Zhao said in prepared remarks that she expects more homebuyers and sellers to gradually return to the market by spring “but mixed economic news and mixed reactions from the market mean the recovery will be uneven.

She said that the Fed’s interest-rate hike this week, for example, is both promising and disappointing.

“The Fed hiked rates at a slower pace than last year, which means mortgage rates are unlikely to rise further,” Zhao said. “But it also signaled ongoing rate increases to fight inflation, which will likely prevent the steep mortgage-rate decline that some optimistic buyers have been waiting for.”

Requests for Home Tours Rise

Redfin’s Homebuyer Demand Index—a measure of requests for tours and other services from Redfin agents—is up 19% from the October low, according to its latest report.

“The market feels hotter, too, with 37% of newly listed homes accepting an offer within two weeks of hitting the market, the highest level since July,” Redfin said.

Mortgage-purchase applications rose 15% from their early-November trough but declined 10% from a week earlier.