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Mortgage Rates Climb Ever Higher Once Again

By Catherine Tims | May 25, 2023

Recent market data has provided us with some bad news: average mortgage rates in the US have reached a new high-water mark. With an eye-watering rate of 7.17 percent, this new figure is a 52-week high, and real estate professionals are watching the markets closely to see how this will influence the coming weeks and months. 

A Larger Breakdown

That 7.17 percent average rate is for 30-year fixed mortgages and represents an increase of 13 basis points week-on-week, though the rate was unchanged from the previous day when the report was generated. Other 30-year fixes didn’t fare as well, however - the average rate for 30-year refinanced fixed mortgages was even higher at 7.2 percent, which was 4 basis points less than it was last week.

Meanwhile, 15-year fixes also hit a 52-week high at 6.48 percent, a jump of 15 basis points from the week before. 5/1 adjustable rate mortgages were also trending higher at 5.80 percent, an increase of 7 basis points, and both FHA and VA loans were up as well at 6.13 percent and 6.41 percent respectively. 

State-by-state, the markets hit worst by rate hikes were Wyoming, New York, and Wisconsin, which all saw average rates increase the most. Wyoming’s new average for a 30-year fix rate now stands at 7.31 percent, New York’s rose to 7.08 percent, and Wisconsin increased to 6.91 percent.

The Culprit, As Ever, is Likely the Fed

So whom do we have to thank for these new highs? There are dozens of factors that can influence mortgage rates, but in this case, we can easily point to the single most contributory factor being the Federal Reserve’s May 3 base rate hike. While it was done for the noblest of intentions (slowing down inflation), every increase the Fed issues to its base rate makes lending more expensive across the board as banks and other lenders increase the rates on their lending products accordingly. 

Hopes had been high that we’d finally seen the last of the Fed’s “helpful” hikes, but May saw an end to those hopes. To anyone who’s been working in the real estate industry, this will come as no surprise. Since the Fed first began raising rates in the spring of 2022, the markets have been incredibly volatile. Each subsequent base rate increase drove mortgage rates to new highs, making lending increasingly expensive for borrowers as a result. Real estate agents have been scrambling ever since, preparing themselves for the inevitable market slowdown driven by drops in demand due to affordability concerns. At this point, it’s impossible to know if the central bank has further plans to keep going, but it’s better to be prepared just in case.

So What’s A Real Estate Professional to Do?

Being armed with the latest mortgage rate data is crucial for any real estate agent that wants to stay informed. Knowing where the market is will help you pivot your strategies in ways that will allow you to maintain or grow your business, even in situations where market conditions aren’t the best. But what, exactly, are some things that you can do as a real estate professional in the face of what looks like pretty bad news?

First things first, of course, is to not panic. It’s crucial to understand that while average rates are at yearly highs, this doesn’t mean the market sector you specialize in will be impacted to the same degree. There are dozens of other factors that influence real estate markets, especially on a micro level - in places where demand for properties is still high and inventory remains limited, even moderate mortgage rate hikes will have a diminished impact on home prices. 

Even in places where the rate hike is felt more keenly, you can pivot your market activities toward better options. Focusing on working with clients looking for rental properties instead of direct sales is one solution, as higher mortgage costs will price many out of buying a home outright, leaving them looking to become tenants instead of homeowners. 

Other Ways to Weather the Storm

Navigating a down market isn’t easy, but there are ways you can do so. If you’re worried about your own market, the best thing you can do is to up your game as a real estate professional. Becoming an expert in your market is ideal, as the more you know about local market conditions, the better equipped you will be to help close sales. Networking with other real estate professionals is also an excellent idea. Banding together to survive less-than-ideal conditions by attending industry events, joining online forums, and connecting with other real estate agents on social media can pay off in the long run.

At the same time, you’ll need a way to differentiate yourself from your competitors in a down market. You can do so by providing excellent customer service to your clients. Being responsive to their needs, being honest and transparent, and going the extra mile to help them achieve their goals sets you apart from other real estate agents in your area. Finally, and perhaps most importantly, exercise patients. It often takes longer to sell homes in down markets. Don’t get discouraged if it seems like listings and sales just aren’t coming your way - patience and diligence will yield you results over time.

Realty Biz News Contributor at Realty Biz News
Catherine covers a broad spectrum of niches: personal finance, mortgages, travel, housing, internet marketing, network marketing, marketing, and business. Catherine is a Realty Biz News Contributor
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