Mortgage Rates Reach New Heights: Is Love in the Air or Just High Inflation?

Can't Keep Rates Down Even With a Tutu

As if the cost of living wasn't high enough mortgage rates decided to put on their dancing shoes and do a grand jeté into the sky. According to a monthly government report on wholesale prices inflation is still persistent and hotter than most analysts had predicted causing the average rate on the 30 year fixed mortgage to jump to an impressive 7.14% its highest level in two months. Looks like the era of low rates is ending and it's time to do the financial equivalent of a wardrobe change.

A Roller Coaster Ride for Rates: Hold On Tight

The roller coaster ride of mortgage rates continues and it's giving us whiplash. After hitting a high in October rates took a sharp decline but like a persistent ex they just couldn't stay away. In December rates started leveling out at around 6.6% causing a glimmer of hope in the housing market. But alas the optimism has faded as rates soared back over 7% last Friday thanks to another government report showing higher consumer prices. It seems like the only thing hotter than New York City's dating scene is inflation.

Housing Market: Love at First (Lower) Rate

Lower mortgage rates were like a love potion for the housing market. Sales of newly built homes jumped 8% in December and even homebuilders were feeling the love with rising buyer traffic to their model homes. The National Association of Home Builders even reported that builders expected mortgage rates to continue to moderate in the coming months. But just when everything was looking rosy rates decided to break up with the housing market and go their own way. The question is will buyers and homebuilders survive the heartbreak or find new love in the spring?

Buyer Traffic: Cupid or Casanova?

Buyer traffic is like a love affair: small declines in interest rates can produce a disproportionate positive response among likely home purchasers. Homebuilders were getting ready to pop the champagne expecting more buyers to enter the marketplace if rates continued to decline throughout the year. But now with rates shooting higher it's uncertain if love will still be in the air. Will buyers stay committed or decide it's time to start seeing other homes?

Rates on the Rise: Is Love About to Leave the Building?

The unofficial start of the spring housing market is upon us but it seems like rates want to rain on the parade. With home prices already soaring and supply at an all time low the last thing buyers need is skyrocketing mortgage rates. In fact when rates flattened in January existing home contracts and new listings weakened. It's like a bad breakup where no one wants to make the first move. Will this new upswing in rates be the final straw that sends buyers running for the hills? Only time will tell if love will endure or if it's time to pack up and leave the housing market for good.