Yields on the 10-year Treasury rose to over 4.7% mid-morning on Thursday, following the news that the U.S. economy grew by just 1.6%, while inflation was up by 3.7%.

The 30-year fixed rate mortgage rose 7 basis points to 7.17% on April 25, up from 7.1% the prior week and 6.43% for the same time last year, the Freddie Mac Primary Mortgage Market Survey found.

Meanwhile, the 15-year FRM rose to 6.44% from 6.39% for the week of April 18. For the same week in 2023, the average for this loan product was 5.71%.

"Despite rates increasing more than half a percent since the first week of the year, purchase demand remains steady," Sam Khater, Freddie Mac's chief economist, said in a press release. 

"With rates staying higher for longer, many homebuyers are adjusting, as evidenced by this week's report that sales of newly built homes saw the biggest increase since December 2022."

Freddie Mac's April 14 housing outlook posting claimed housing demand is making a healthy recovery compared to last year, with purchase applications for 30-year FRMs up 8% from the same period last year, even as the median mortgage rate and median sales price have increased, according to Loan Product Advisor data.

"First-time homebuyers continue to carry demand so far this year as they make up almost 6 out of 10 purchase applications," the post said. "Nonetheless, the median payment (principal and interest) is up 7% from the same period last year, and that continues to be a significant headwind as affordability remains near historic lows."

As of late morning on Thursday, the 30-year FRM was at 7.457%, according to information from LenderPrice posted on the National Mortgage News website. Last week, it was 39 basis points lower, at 7.067%.

While the mean rate on Zillow's tracker was up by 1 basis point mid-morning Thursday, to 6.96%, compared with Wednesday, it was down 5 basis points from the previous week's average of 7.01%.

Because of speeches by Federal Reserve officials last week, financial market participants adjusted their expectations for economic growth, inflation and policy, said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a statement issued Wednesday night.

"Expect more rate volatility ahead as the Fed and investors wait for more conclusive evidence of a return to low, stable and more predictable inflation," Divounguy said. "The [personal consumption expenditures] inflation report this week will likely cause some major repricing activity."

Fannie Mae's April mortgage forecast now calls for mortgage rates to average 6.6% in 2024, and 6.1% in 2025. "However, interest rates remain volatile, particularly given changes in Fed policy expectations, which adds risk to our outlook," a blog posting noted.

Due in particular to its more optimistic home price growth expectations and somewhat lower mortgage rate path, Fannie Mae now expects 2024 purchase volume to total just under $1.4 trillion, representing a $31 billion upward revision from March's forecast and 14% growth from 2023. In 2025, purchase originations should grow a further 15% to $1.6 trillion, a further upgrade of $52 billion from the prior forecast.

Refinance volume should end this year at $415 billion and $657 billion in 2025.

The Mortgage Bankers Association on the other hand, cut its 2024 forecast to $1.82 trillion, the 2025 outlook to $2.13 trillion and the 2026 projection to $2.33 trillion earlier this month.

In fact, the PCE report "was surprisingly strong," Joel Kan, the MBA's deputy chief economist, said in a statement issued following the GDP release.

"However, this persistence in higher than desired inflation will leave the Fed in no hurry to cut rates," Kan said. "As indicated in our April forecast, we expect potentially two rate cuts in the latter part of this year."