Mortgage rates rise to 6.8%, affecting homebuyers

Mortgage rates increased this week as lenders prepare for an uncertain economic outlook. The Federal Reserve decided to keep the federal funds rate steady at 4.25% to 4.5% during its meeting on March 19. The Fed signaled that it will wait for more data before making any changes to its policies. The average rate for a 30-year fixed mortgage rose to 6.8%, which is an increase of 18 basis points from the prior week. This means potential homebuyers could face higher costs in their monthly payments. Fed Chairman Jerome Powell acknowledged that the economy has improved over the past two years. However, he expressed caution due to rising inflation, which he said may partly result from tariffs. Powell noted that uncertainty is high regarding factors like tariffs, immigration, and other economic policies. For homebuyers, the current market poses challenges. There are fewer homes available, and high-interest rates along with rising costs are making it harder for some buyers to enter the market. Data from March 18 indicated a 6.8% drop in new home construction permits compared to February, suggesting fewer homes will be built this year. Despite these obstacles, experts advise potential buyers not to wait for a better time to purchase a home. If you find a house that meets your needs and budget, it's wise to proceed rather than hold out for potentially more favorable rates in the future.