Mortgage rates

A potential buyer with a budget of $3,000 per month for their payments is now able to afford an approximately $453,000 home.

Senator Elizabeth Warren and three Democratic colleagues urged Federal Reserve Chair Jerome Powell to lower interest rates to help bring down housing costs ahead of the central bank's policy meeting this week.

Even with the 9 basis point rise this week, they have remained at the same level since mid-December, and that should bring people into the market, Freddie Mac said.

While becoming more popular in the past year as mortgage rates have increased, the differential is small between those that did and didn't pay points for a permanent buydown, Freddie Mac said.

In the quarter, 80% of the homebuilder's mortgage customers used the rate buy-down incentive, the company said on a call with analysts.

Its January forecast reverses the call first made in April 2022 that the U.S. economy would slip into an extended downturn.

The move is somewhat counterintuitive relative to other market signals but Fannie Mae generally forecasts a net positive shift in lending conditions this year.

With traders reducing wagers on a rate cut at the Federal Reserve's March meeting and the yield on 10-year Treasuries rising to 4.11%, the highest since Dec. 12, real estate is primed to take a hit.

But the index is still well below pre-pandemic levels, suggesting momentum may be slow to build with borrowing costs still twice as high as they were two years ago.

The Fed governor offered some of the most detailed remarks to date around the Federal Open Market Committee's intentions to ease monetary policy this year.