Following several weeks of steady declines, mortgage rates continue to rise each week as consumer prices soar. This week, the 30-year mortgage rate rose to 7.4% from 6.73% the week before and 6.64% the week prior. 2023 was off to a strong start as people returned from holiday vacations and rates declined but as rates begin to rise again, “it’s almost like there was a false start,” said Don Monson, branch manager at Sente Mortgage.
As a result, “data on inflation, employment and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates,” said Joel Kan, deputy chief economist at the Mortgage Bankers Association.
Although mortgage rates are increasing, there is still hope the housing market will rebound for the remainder of the year. The Mortgage Bankers Association (MBA) expects the 30-year fixed-rate mortgage to drop to 6.1% in the second quarter, 5.7% in the third quarter and 5.3% in the fourth quarter. However, NAR expects rates to drop to an average of 6.1% in 2023 and 5.4% in 2024.
As these higher mortgage rates set in, homebuyers may gain leverage, but it will likely depend on where they live. The Know Buyer-Seller Market Index 2023 forecast finds a clear divide between the best markets for buyers versus sellers, read more.
The Fed is expected to announce another 0.25% interest rate hike on March 22, although a 0.5% increase is not out of the question. The Fed chair, Jerome Powell says, “the economy is stronger than expected and the ultimate level of interest rates is likely to be higher.” The following meetings will take place on May 3 and June 14. Check out the CME FedWatch Tool, which monitors the likelihood of the Fed changing the target rate at the upcoming FOMC meetings
When it comes to home prices, growths have cooled for the 9th consecutive month in January – but not for Florida, which has 6 of the top 10 price-increase metros. However, the Tampa Bay area saw quarter-to-quarter drops, down 0.1% between Q3 and Q4, reported Florida Realtors®.
Meanwhile, housing inventory fell by 11,021 between February 27 and March 6, which is a notable difference than the week prior but still higher than this time last year. Read the full report here.
In local news, on Tuesday, March 7, the Florida Public Service Commission (PSC) approved a new rate hike for TECO customers: an 8.5% mid-course fuel correction fuel charge increase due to the volatile costs of fossil fuels, and recovery of nearly $131 million of storm costs from seven storms in 2022. Only two of these storms impacted TECO’s service area and customers can expect a 9.8% higher bill starting in April. Read the full press release.