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Federal Reserve Bank of New York President John Williams said the economy is headed in the right direction, and it will likely be appropriate to cut interest rates later this year. Speaking in an interview with Axios, Williams said officials want to see inflation data that continues to move toward the central bank's 2% goal. "At some point, I think it will be appropriate to pull back on restrictive monetary policy, likely later this year," Williams said in the interview published Friday. "But it's really about reading that data and looking for consistent signs that inflation is not only coming down but is moving towards that 2% longer-run goal."Top Fed officials hammered home the message this week that the US central bank is still on track to cut interest rates this year — just not anytime soon.As recently as mid-January, investors and some economists were betting on the Fed to start lowering rates at its March 19-20 meeting. Markets have since significantly dialed back expectations for early and rapid cuts, shifting wagers on the first move to June or July on the heels of reports showing job and price gains well above forecasts in January.The patient approach by policymakers has been largely validated by data released in recent weeks. The consumer price index rose by more than forecast in January, and prices paid to US producers also climbed. As a result, economists forecast the Fed's preferred gauge of underlying inflation to rise at the fastest pace since early 2023 when it's released next week.Williams also said in the interview, which was conducted Thursday, that the recent spike in auto and credit card delinquencies is one reason why he expects consumer spending growth to slow this year. On the balance sheet, Williams said he and his colleagues are taking lessons from 2019. At the time, bank reserve balances became too scarce, causing overnight rates to spike and roiling markets. Officials will have an in-depth discussion about the topic at the March gathering. "We've learned some of the lessons that — you know, last time we had set out to get to the minimum level of reserves consistent with efficient operations, carrying out monetary policy," he said. Williams noted the Fed is looking to maintain a buffer above the lowest comfortable level of reserves without pushing too hard to the point of scarcity, and he pointed to the standing repo facility as a backstop that could help prevent market disruption. He also acknowledged they're looking at a variety of indicators, "but maybe through a different lens.""Interpreting these different indicators and some of the new ones we've developed are consistent with that goal," he said. "I think all three of those really come from the lessons of last time and experience from 2019 and then what happened after." 

Black renting families are catching up to whites in terms of mortgage readiness, although a sizable racial disparity in home buying power remains.Around 7.8% of Black non-home-owning families were "income mortgage-ready" compared to 12.5% of whites in 2022, according to research shared Friday by Zillow. The racial gap of 4.7% fell from a 7.9% split in 2012. The data from the U.S. Census Bureau's American Community Survey defines "income mortgage-ready" as a family being able to make home loan payments for a typical home in their local market. Among the nation's 138 million non-home-owning families in 2022, 6.3 million were considered ready by the definition. "It's crucial to recognize the existence of additional barriers beyond monthly cost, including access to funds for a down payment and closing costs — as well as other barriers that significantly contribute to mortgage denials," said Orphe Divounguy, Zillow senior economist, in a press release. The report comes days after a National Association of Realtors study found 44.1% of Black Americans today are homeowners, well behind rates for Hispanic Americans and Asian Americans. Mortgage applicants of color are more likely to be denied than white applicants, studies show, with lenders often attributing insufficient credit history or debt-to-income ratios for Black would-be-buyers. The 7.8% of Black families income mortgage-ready compose of 738,000 households among 9.4 million Black non-homeowners, Zillow found. That share is greatest in typically more affordable Midwest metros such as Detroit (13.3%), Memphis (12.8%), and St. Louis (12%).The ratio of whites who are income mortgage-ready is still greater by several percentage points in those cities, and far larger in the nation's most expensive destinations like the Bay Area and the Northeast. At-large the number of renters of all races able to afford a mortgage fell from 12.9 million in 2021 to 6.3 million in 2022. The dip coincides with rates soaring from 3% to 7% over that time, and the median nationwide home price hovering closer to $400,000 amid scant supply.

Fannie Mae announced the appointment of technology and banking industry executive Peter Akwaboah to chief operating officer.Akwaboah comes to the government-sponsored enterprise from Morgan Stanley, which he joined in 2015. He most recently served as a managing director and chief operating officer for technology and the head of innovation at the Wall Street firm. In that role, he was charged with oversight of technology strategy aimed at encouraging innovation, driving results and building resilience throughout the global investment bank. As COO at Fannie Mae, Akwaboah will take on similar management responsibilities, leading its chief information office, enterprise operations and workplace and security functions. With his appointment, he also will become a member of Fannie Mae's management committee. "Peter's many years of experience and unique combination of technology and operations expertise will add to our deep leadership bench," said Fannie Mae CEO Priscilla Almodovar in a press release this week. "We look forward to the talent and experience he'll bring to our technology and operations as we continue to respond to the needs of the market, carefully balancing innovation, risk management, and our commitment to our housing mission," Almodovar added.While at Morgan Stanley, Akwaboah also worked with the firm's various businesses to improve technology investments across the company to improve profitability. Alongside his role directing technology strategy, he served on the board of the bank's philanthropic arm and was a member of the Federal Reserve Bank of New York's payments risk committeeEarlier in his career, Akwaboah held several technology-related leadership roles at other major international corporations, including Royal Bank of Scotland, Deutsche Bank, KPMG and IBM.Akwaboah is scheduled to start in his new position on May 20 and will help lead an enterprise that has been at the forefront of digital adoption within home finance in recent years. In the past 12 months, the GSE broadened several digital initiatives meant to encourage use of technology and data in the mortgage industry while fulfilling its mission to develop homeownership opportunities.As part of its efforts, Fannie Mae started leaning further into the application of climate analytics and rent reporting software within underwriting. At the same time, it is also making moves to streamline the origination process for condo purchases and expand the use of attorney-opinion letters in some situations to increase supply and affordability.The appointment of a new COO is the latest in a series of leadership changes at Fannie Mae in the past few months. In December, President David Benson announced his planned retirement set for the first half of 2024, while chief administrative officer Jeffrey Hayward also left the organization. Almodovar, who began her tenure as CEO in late 2022, will also add the title of president to her name, while Fannie Mae's former general counsel, Stergio "Terry" Theologides, succeeded Hayward.In its most recent earnings call, the enterprise reported profits of $17.4 billion in 2023, citing the impact of elevated home values.

Newrez is alleging James Hecht, former head of its retail operations, staged a ruse in which he abruptly left to a direct competitor and brought his colleagues, a handful of divisional managers, along with him.According to the suit, prior to departing to OneTrust Home Loans on Feb. 1, where Hecht is now CEO, he fired the Newrez managers and later rehired them at his new place of employment. The scheme also took place shortly after Newrez allegedly announced a recommitment to its retail business after plans to sell didn't materialize.Additionally, Newrez is accusing OneTrust Home Loans for conspiring with Hecht in this alleged ploy."Hecht acted in his own interest instead of the best interests of Newrez by orchestrating the departure of senior Newrez executives who he then immediately handpicked as his executive team at OneTrust," the mortgage lender said in its suit.The lender is suing for breach of contract, misappropriation of trade secrets, unfair competition and tortious interference with existing contracts.Newrez declined to provide commentary, however, its spokesperson added "the facts and the law will speak for themselves in court." OneTrust did not immediately respond to a request for comment Friday.The suit, filed in a Pennsylvania federal court, alleges Hecht's plan to depart Newrez and bring along his coworkers was hatched in mid-January during a corporate meeting in Arizona.During said meeting, Hecht, who was tasked since late 2023 to explore a potential sale of Newrez's retail mortgage business, announced to senior executives that plans to sell were unsuccessful and confirmed a renewed commitment to this line of business.  The company's retail channel generated close to $5 billion in volume in 2023.He recommended for Newrez to restructure its retail mortgage business. On Jan. 31, Hecht laid off seven managers as an alleged means to restructure, but then quit himself.  Newrez claims that Hecht "synchronized his own resignation to coincide with his decision to release the other senior executives from employment at Newrez" and that it is "inconceivable that all the senior executives simultaneously made a decision to resign to join the same competitor without extensive coordinated preparation."Overall, Hecht's role at Newrez was multifaceted. As the head of Newrez's retail mortgage business, Hecht formulated short and long term business strategies, analyzed the potential sale of this business and made personnel decisions, filings show. He was able to successfully execute this role because he had unlimited access to "Newrez's most sensitive confidential information and trade secrets to execute those responsibilities," the lender said. Newrez claims this access gives Hecht an advantage in further soliciting other Newrez employees to join OneTrust, and that its competitor has already started doing so.Specifically, Hecht had complete knowledge of the loan originators' production and compensation information, the lender claims. "That information to formulate compensation offers on behalf of OneTrust that would be sufficient to incentivize the larger producers to jump ship from Newrez for OneTrust," the suit said.Newrez also points the finger at OneTrust for trying to secretly acquire its retail operations by unlawful means."OneTrust, rather than seek to acquire Newrez's business operations directly from Newrez for consideration (i.e., by lawful means), conspired with Hecht to acquire Newrez's business operations indirectly," the lender claims in its legal filing.Newrez is asking for the court to prohibit OneTrust from hiring its current or recently former employees. It also wants to bar Hecht from employment at his current company.

Property lenders have often been willing to work with borrowers since the pandemic upended commercial real estate. Increasingly, their patience is running out. There were 635 U.S. commercial real estate foreclosures in January, up 17% from the previous month and roughly twice as many as in January 2023, according to a report from Attom. Those figures are based on the number of commercial properties with at least one foreclosure filing entered into Attom's data warehouse in a given month. Foreclosures hit a low in May 2020, as lenders struck deals to help owners navigate the initial shock of Covid. Those forbearance programs have mostly run out. Meanwhile, borrowers are grappling with higher interest rates, making refinancing difficult, and shifting work trends that have cratered demand for office buildings.The increase was especially drastic in California, where foreclosures rose 72% in January from a month earlier and nearly tripled since January 2023.

Rocket Cos. lost $233 million in the final months of 2023, sending its full-year mark deep into the red. Executives for the Detroit-based giant Thursday touted the firm's artificial intelligence bona fides and cost cuttiing amid its step back in quarterly and annual performance. The company, which predicted a difficult period, saw net income fall from $114.9 million in the third quarter, but improved on its $492.6 million net loss to close 2022.The recent fourth quarter pushed Rocket's net loss for the year to $390 million, also a major step back from the $699.9 million profit it reported amid the market's downswing at the end of 2022. Rocket posted adjusted net revenue of $885 million in the fourth quarter – a figure above guidance that chief financial officer and treasurer Brian Brown attributed to stronger origination metrics."We delivered these achievements in what was one of the worst quarters for mortgage origination in recent history," he said in a conference call Thursday evening. Rocket Mortgage counted total origination volume of $17.2 billion between last October and December, down 22% quarterly and 9% less than the same time in 2022. Over 2023, originations hit $78.7 billion, a steep decline from the $133 billion in volume in 2022.Origination volume in the direct-to-consumer channel of $10.36 billion and in Rocket's partner network, including Rocket Pro TPO, of $8.46 billion were down quarterly and year-over-year as well. Each channel also saw steep annual volume dips. Brown and CEO Varun Krishna in Thursday's call emphasized Rocket's cost-cutting, with annual expenses falling from $5 billion in 2022 to $4.2 billion in 2023. The business said it cut its project list by more than 80%, slashing or pivoting efforts including Rocket Auto and Rocket Solar for solar upgrade loans.Rocket's prominent AI focus is apparently giving it an edge in originations. In December, its underwriters didn't have to intervene in nearly two-thirds of income verifications, a fivefold improvement compared to a year-and-a-half earlier, the company said. "AI is something that you have to have a right to win. and a right to win means you have to have the assets," said Krishna. "Because of those ingredients that we have at scale, It's why we expect to be a benefactor."The lender's gain on sale margin of 268 basis points was down from the third quarter's 276 bps, but up from the 217 bps at the same time in 2022. Brown told an investor it was hard to say when the company would reach the 300 bps GOS margin of years past, but capacity exiting the market will help. "Now we're starting to actually see it flow through in terms of pricing competitiveness," said Brown of industry capacity reductions.Rocket held $6.4 billion of mortgage servicing rights at the end of the year, a number that's dipped slightly over the past five quarters. The company is actively bidding on MSRs, and Brown said the supply isn't great amid aggressive bids by other industry players. The CFO also expressed confidence in Rocket regarding recent comments by Treasury Secretary Janet Yellen suggesting a nonbank lender could fail amid market stress. Rocket's balance sheet and liquidity of $9 billion are among, if not, the strongest in the industry."It's something we'll pay close attention to. but in a lot of cases, new regulations like this could actually increase our competitive advantage and sometimes even increase the moat around this business," he said.

Customers of Planet Home Lending have filed at least six lawsuits accusing the mortgage lender of failing to protect their personal identifiable information.At least one of the class action suits also includes technology firm Citrix Systems, Planet's vendor, as a defendant.The legal actions are in reaction to a ransomware attack that compromised the Social Security numbers of close to 300,000 Planet Home Lending customers. Alongside that, customers' names, addresses, loan numbers and financial account numbers were leaked, a notice filed by the mortgage lender in January said.Planet Home Lending explained that the hack occurred last fall due to a vulnerability in its information security systems purchased from Citrix Systems. The mortgage company noted prolific hackers LockBit used said vulnerability to bypass its protections and steal customer data.The most recent action, filed Feb. 16 in Florida, accuses Planet Home Lending of leading customers astray regarding the safety of their data. The plaintiff is also suing Citrix Systems for its vulnerability, first discovered last August, which was used by the ransomware gang to gain access to customer PII.Antonio Cole, a customer of Planet, argues he gave his data to Planet "with the reasonable expectation and understanding that Planet's third-party vendors, like defendant Citrix, would comply with their duty to keep such information confidential and secure from unauthorized access." As a result of the cyberattack, Cole claims he became a victim of credit card fraud and has seen an increase in spam emails and text messages.Planet's spokeswoman said that as a matter of policy the company does not comment about legal matters. However, she added that the "suit[s] are without merit" and that the mortgage lender's operations were not adversely impacted.Cole's suit is urging the court to issue injunctive relief mandating Planet to use appropriate security controls to prevent another breach from occurring. "The risk of another breach is real, immediate and substantial," the legal filing argues.Companies in the financial services space have been actively targeted by ransomware gangs in recent months. Alphv, otherwise known as BlackCat, has claimed responsibility for the cyber attack that hit Loandepot, Academy Mortgage and Fidelity National. Meanwhile, Lockbit has been linked to Planet's breach.The federal government and overseas partners have attempted to take down both criminal organizations.In mid-December, the Department of Justice claimed to have launched a disruption campaign targeting Alphv's operations. That same month, international authorities seized the ransomware gang's dark-web leak internet site.  Despite this, Alphv has continued to target companies in the mortgage lending industry.Meanwhile, Feb. 20, the DOJ and the United Kingdom announced they disrupted LockBit's operations by seizing control of servers used by the online gang. A recent report from a provider of wire and title fraud protection has pointed to the mortgage "industry's lack of readiness" in mitigating potential cyber attacks. FundingShielf warned that fraud-related events are likely to increase as the tools available for cyber criminals to attack the mortgage and title space grows.Aging technology applications with gaps in security updates and an availability of artificial intelligence-driven tools to deploy attacks can be potential avenues for nefarious players to attack the financial services sector, FundingShield's report published January said.

JPMorgan Chase's AI research group published 400 papers last year. TD Bank Group's AI group, Layer 6, published 14. JPMorgan Chase's artificial intelligence research team published more than 400 papers in 2023, far more than any other large bank, according to research conducted by Evident. The group produced 45% of all AI research in banking last year. "Jamie Dimon went out and said, we're going to be an AI-first bank and we're going to actually be a tech company," said Alexandra Mousavizadeh, founder and CEO of Evident, in an interview. Recognizing that one of the things tech companies have is AI research labs, he hired Manuela Veloso, who had been a Carnegie Mellon University professor since 1992 and who is a "leading brain on AI," to run it.There are two reasons why AI research labs are important, and why the number of banks doing AI research has jumped from 10 to 40 of the top 50 last year, according to Mousavizadeh. One is that doing research in-house helps companies develop artificial intelligence that works at scale, she said. The other is that banks with AI research labs can more easily attract top AI talent. AI research labs at JPMorgan Chase, TD Bank Group, RBC and other banks are not ivory towers. They work directly with business units to solve specific business problems and to bring their ideas into production. Banks that don't have these in-house groups have to rely on vendors and focus on vendor selection, due diligence and testing, Mousavizadeh said.Building an AI labWhen Manuela Veloso joined JPMorgan Chase in 2018, it was something of a culture shock."It was a big change, after 30-plus years of being in academia," Veloso said. "But on the other hand, it's very exciting. I am a type of personality that loves complex problems and loves thinking about contributing to the success of the place where I am. I feel excited every day about solving more problems."Of Veloso's team of 110 researchers, 75% have PhDs in computer science, statistics, math or engineering; the rest have masters' degrees. All are familiar with writing scientific publications and eager to share their work with the academic community and the rest of the world."Nobody asks them to write papers," Veloso said. "They basically have it in their blood like I do."One recent paper studied how well large language models like GPT-4 can read and understand financial documents, compared to older models specifically tuned to these types of documents.The papers do not mention JPMorgan Chase data;they use public data. "That's why we contribute so much to the advancement of AI in finance, because the research community can start understanding the problems that the finance industry faces, independently from the specifics," Veloso said.TD Bank Group, which is headquartered in Toronto, acquired AI tech company Layer 6 in 2018 and it's become the bank's AI research lab. Last year, Layer 6 published 14 research papers that were presented at AI conferences. One recent paper on tabular data understanding and generation won an award at the 2023 Neural Information Processing Systems Conference. Layer 6 has also filed more than 60 patent applications. In 2023, Layer 6 collaborated on a research paper on electronic health records with the University of Toronto and tech company Signal 1. The paper proposed a deep learning model that analyzes electronic health records to predict future events that could occur to a patient during a hospital stay, so doctors can optimize their care. "We're now exploring how this research could be applicable in a banking setting," said Maks Volkovs, senior vice president and chief AI scientist at Layer 6.Bringing AI products to lifeSuch AI research teams work closely with other parts of their banks, their leaders say.At TD, Layer 6 has created machine learning models that have improved predictive capabilities and introduced AI in every line of business, Volkovs said. The team has developed more than 67 AI use cases across the bank. "We are closely embedded with business teams and work together to create solutions that are focused on our colleagues and customers," Volkovs said. "Our researchers, who are also involved in applied work, actively participate in all stages from ideation and model development to deployment and ongoing monitoring."For example, this year the Layer 6 team published a paper titled Conformal Prediction Sets Improve Human Decision Making. The paper shows that humans can make more accurate decisions when they interact with machine learning models that provide predictions with high rates of estimated confidence (e.g. the model is 95% confident that a given image is of a book). "Our research was used to create a model that applies a similar approach that underwriters use in the residential mortgage pre-approval process," Volkovs said. "We use AI to provide a smooth pre-approval process for our customers and get them credit decisions in only a few minutes." At JPMorgan Chase, Veloso's group has monthly meetings with business leaders about the problems they need help solving."They don't ask us to do dashboards," Veloso said. In a recent meeting, Veloso's team heard that some salespeople had completed 30,000 client meetings. She offered to summarize and analyze those meetings. Veloso always hopes the business people will listen to her team and "have the wisdom and knowledge to decide when to change," she said. "That's the role of AI research – for them to be exposed to what can be done," Veloso said. "The more I show them things that they probably have not thought about before, the more success we bring to the firm. It's the level of 'aha,' the level of novelty that we may bring to their thinking." Getting models into production can take time, Veloso acknowledged. But for certain very practical projects, like using large language models to read enterprise documents, the process gets speeded up because it's something almost everyone in the bank can use."You can cut your time to production down a heck of a lot by having those research capabilities," Mousavizadeh said. "So you're much more nimble. All of the banks are looking at time to production right now because it affects how quickly you can ideate, how quickly you can get things into production."Attracting tech and AI talentWhen AI researchers, data scientists and developers are considering a job at a bank, they still   want to be able to publish research, get cited in papers and present at AI conferences."It's super important for the banks that they have people [at conferences] because it's also a pipeline of talent," Mousavizadeh said. When Layer 6 joined TD, there were 15 people in the group. Today, there are 200 people in TD's AI and machine learning team. They've come from big tech companies, universities and other financial institutions.Team members have won top honors at a machine learning conference on recommender systems three times, making TD the only bank to have ever done this, Volkovs said. "These kinds of accomplishments help us build our brand globally and position us as a destination of choice for top talent," he said.Mousavizadeh said she has seen an overall shift in banks' interest in AI research."You're suddenly seeing HSBC and BBVA leaning into this and doing more research, hiring more researchers, having it in house, being able to distribute it," she said. "It changes the mindset. They're also now able to hire that talent that they couldn't hire before. They're putting a stake in the ground: We're serious. Research is becoming essential." The same will soon be true of quantum computing, she predicts. 

Servicing has benefited mortgage lenders otherwise struggling with profitability and Mortgage Bankers Association numbers presented at a conference Thursday suggest it gave large players a particularly notable boost in first-half 2023.Preliminary and pretax net operating-income for large depositories and independent mortgage banks with in-house servicing show that after a run of years with the per-loan average or below $300, the number jumped to above that level for the first time since the 2000s' housing boom.It's worth examining factors leading to the increase to $366 in a market where mortgage companies on average have suffered several consecutive quarters in which the average player took a loss.(The operating income number does not reflect financial costs such as hedging on mortgage servicing rights fluctuations.)Larger loan balances that naturally boost servicing revenues paid in basis points per mortgage have been a key driver. These have been fueled by household formation demand that has outweighed limited inventory in a relatively strong economy.Revenues associated with housing-related payments that servicers escrow for borrowers additionally contributed, Marina Walsh, the MBA's vice president of industry analysis, told conference attendees."Escrow earnings have also had a nice rebound this year because we had few prepayments, and not a lot of interest expense in advances because delinquencies are so low," Walsh said.  Marina Walsh, vice president of industry analysis at the Mortgage Bankers Association's 2024 servicing conference.Bonnie Sinnock However, spikes in charges like taxes and insurance could jeopardize that if consumers have trouble paying.A study by industry vendor Lereta found that the percentage of consumers who have reported recent increases in tax and insurance charges have been 57% and 38%, respectively.Several other factors also could affect large players' economies of scale including whether strong loan performance continues. Distressed loans tend to have higher expenses.Also a factor is larger servicers' ability to invest in cost-saving technologies, some of which are driven by artificial intelligence innovations that can produce operational efficiencies.Economic conditions that affect both loan costs and performance also will be a determinant.To date, job numbers closely tied to loan performance have remained relatively stable with hints of weakness in hiring, as consumers experience or evince some financial strain from inflation and high consumer borrowing rates, said Joel Kan, the MBA's deputy chief economist.The unemployment rate was last pegged at 3.7%. Kan said it should be "closer to 4.5% by the end of this year or early next year, maybe peaking in late 2025."So far, both the MBA and other providers of delinquency data say they haven't seen anything particularly worrisome in overall performance numbers.While foreclosure starts did rise 43.3% on a consecutive-month basis in January to 34,000, the rise was partially seasonal, according to Intercontinental Exchange data inherited from its recent acquisition of servicing technology provider Black Knight."While January's jump in foreclosures is worth watching, serious delinquencies remain low, with 70% of such loans still protected from foreclosure, reducing near-term risk," ICE said in a press release Thursday.Meanwhile, some differences will be at play between the outlook for different large institutions' servicing profitability.Big depositories may have a great amount of older loans with smaller balances in their portfolios. IMBs may have a larger share of government-backed loans that tend to be more sensitive to performance issues.A recent spike in delinquencies associated with Federal Housing Administration-insured loans isn't necessarily worrisome as it's been contained to earlier-stage arrears that could be resolved through foreclosure prevention programs, Walsh said.Borrower loss-mitigation programs like the payment-supplement partial claim that the FHA recently finalized have some upsides in that regard, but they also create some challenges as their performance rates are unknown and they require some costs to implement.So far the foreclosure prevention outcomes the MBA has been tracking since the pandemic suggests 75% of mortgages that go through workouts are performing, Walsh said.However, she added that how many of these borrowers have been through multiple workouts is a question the MBA is researching. Conference attendee Donna Schmidt, founder of WaterfallCalc and a managing director at DLS Servicing, said numbers she's seen in her business suggest there's been an uptick in redefaults that may stem from repeat use of the streamlined loss mitigation that's proliferated since the pandemic."In 2022, 5% of the FHA loans that were run through our system had a previous partial claim. In 2023, it was 24%," she said.

Mortgage rates surged to their highest point in over two months, as investors revised their forecasts based on new economic data and the anticipated timeline for changes in Federal Reserve policy, according to Freddie Mac. The 30-year fixed-rate average jumped up 13 basis points to finish at 6.9% for the period ending Feb. 22 in Freddie Mac' Primary Mortgage Market Survey. One week earlier, the 30-year average came in at 6.77%, while for the same seven-day period in 2022, the rate stood at 6.5%. At the same time, the 15-year average saw an even steeper week-over-week increase, rising 17 basis points to 6.29% from 6.12%. In the same period, a year ago the average rate came in at 5.76%.In February, the 30-year rate accelerated by 27 basis points as the most recent data showed the U.S. economy to be more robust than what government officials would prefer. February's movement comes after a sustained early winter decline in interest rates, followed by a period of moderation. "Strong incoming economic and inflation data has caused the market to re-evaluate thepath of monetary policy, leading to higher mortgage rates," said Sam Khater, FreddieMac's chief economist, in a press release.The release of minutes this week from the most recent Federal Open Market Committee meeting points to mortgage rates staying elevated or rising even higher in the near future. Minutes showed widespread agreement among central bank officials that a reduction in the federal funds rate would have to wait until inflation ticked down closer to an acceptable level.Late 2023 comments from Fed Chair Jerome Powell had led to hopes among some investors that the initial cut could come as early as March. The enthusiasm helped drive mortgage rates down in December, but markets are now readjusting, according to Orphe Divounguy, senior macroeconomist at Zillow Home Loans."Although inflation has been easing toward the Federal Reserve's 2% target, consumer and producer price inflation accelerated in January, erasing any doubts that the first Fed rate cuts will likely have to be postponed," he said in a research statement released on Wednesday. The 10-year Treasury yield, which tends to correspond to mortgage rates, also headed higher over the past week. After closing at 4.24% on Feb. 15, it had risen to 4.33% on Thursday morning. The potential for rates to return above 7% again led to a steep fall in loan application volumes over the past week according to the latest data from the Mortgage Bankers Association. It also spells unwelcome news for aspiring buyers and lenders, who had seen borrowers coming back early in the year after a challenging 2023. The last time the 30-year rate averaged more than 7% was in early December, when it landed at 7.03%.  "Historically, the combination of a vibrant economy and modestly higher rates did not meaningfully impact the housing market," Khater said. "The current cycle is different than historical norms, as housing affordability is so low that good economic news equates to bad news for home buyers, who are sensitive to even minor shifts in affordability."Other industry rate trackers showed similar-sized upward movements in the 30-year rate in the past several days, with Zillow reporting the average at 6.75% on Thursday morning. The rate climbed higher from last week's average of 6.65%.  Optimal Blue's product and pricing engine reported the 30-year conforming average as 6.93% at the close of business Wednesday, rising 12 basis points from 6.81% on Feb 15.