Anticipated inflationary pressures are set to drive up borrowing costs just as the housing market gears up for its peak season.

Recent economic data has painted a picture of a delicate economy grappling with persistent inflation, nudging mortgage rates closer to the 7% mark. According to Freddie Mac's latest report, the average rate for a 30-year fixed-rate mortgage now stands at 6.88%.

Jessica Lautz, deputy chief economist at the National Association of REALTORS®, likens predicting mortgage rates to shaking a Magic 8 Ball, with the current outlook suggesting a disappointing rise in the weeks ahead, dampening the spirits of springtime home buyers.

The impact of the higher-than-expected inflation figures released on Wednesday, which saw the Consumer Price Index (CPI) climb to 3.5% in March, is expected to ripple through the mortgage market gradually. NAR Chief Economist Lawrence Yun has hinted that rates could breach the 7% threshold in response to this inflationary pressure.

Prospective home buyers this season are likely to encounter steeper borrowing costs compared to a year ago, potentially deterring some from entering the market. With a 20% down payment on a $400,000 home, the typical monthly mortgage payment would now be $2,366 at the current 6.88% rate, notes Lautz. This may pose challenges, particularly for first-time buyers who lack housing equity to offset these costs.

Freddie Mac's latest data reveals the following national averages for mortgage rates:

A. 30-year fixed-rate mortgages: averaged 6.88%, up from last week's 6.82% and significantly higher than the 6.27% average from the same period last year.
B. 15-year fixed-rate mortgages: averaged 6.16%, climbing from last week's 6.06% and surpassing the 5.54% average from a year ago.