Mortgage rates have reached a new high, surpassing 7% this week, which may impact the enthusiasm of potential homebuyers during the critical spring homebuying season, according to Freddie Mac's latest Primary Mortgage Market Survey. The average 30-year fixed-rate mortgage was 7.10% for the week ending April 18, up from 6.88% the previous week and 6.39% a year ago. Similarly, the average rate for a 15-year mortgage increased to 6.39%, up from 6.16% last week and 5.76% last year.
The Federal Reserve's decision to delay a possible interest rate cut has contributed to the elevated borrowing costs, with market expectations for a rate cut in the summer now potentially shifting later. As rates continue to rise, potential homebuyers are faced with the decision of purchasing now or waiting for possible rate decreases later in the year.
Despite the challenging affordability landscape, Fannie Mae's March Home Purchase Sentiment Index indicated a slight increase in the percentage of homeowners who believe it is a good time to buy a home, as well as an uptick in the percentage of homesellers who view it as a favorable time to sell.
In addition to high mortgage rates, rising insurance costs have also added to the affordability issues for homeowners. Home insurance premiums for a $300,000 property in the U.S. increased by 12% in 2023 to an average of $1,770 per year. Homeowners in disaster-prone areas face the additional challenge of finding an insurer willing to provide coverage.