The interest on a 30-year fixed-rate mortgage rose last week from an average 3.05% to 3.09% —the highest since April, Freddie Mac reported
US mortgage rates keep climbing above 3% and have now reached their highest level in six months, according to a long-running survey.
The interest on a 30-year fixed-rate mortgage rose last week from an average 3.05% to 3.09% —the highest since April, mortgage giant Freddie Mac reported on Thursday. One year ago, the popular loans were averaging just 2.80%.
Mortgage rates are continuing to rise due to the trajectory of both the economy and the pandemic, says Sam Khater, Freddie Mac’s chief economist.
New coronavirus infections are falling, but inflation is high and could get worse, putting the Federal Reserve on a path to undo its pandemic-fighting policies that have helped keep mortgage rates low.
The average 15-year fixed mortgage rate also climbed last week, to 2.33% from 2.30%, Freddie Mac says.
With that uptick, the typical rate is now exactly where it was last year at this time.
The shorter-term mortgages are popular among refinancing homeowners. While going from a 30-year to 15-year loan may mean higher monthly payments, the lifetime interest costs will be far lower.
Rates on five-year adjustable-rate mortgages edged down last week, from 2.55% to 2.54%, on average. A year ago, the loans were averaging a much steeper 2.87%.
Adjustable-rate mortgages (ARMs) begin with fixed interest rates for a period of years, then can rise or fall at regular intervals. A 5/1 ARM starts with a fixed five-year interest period and then adjusts every year after that.
The one-two punch of rising inflation and the Fed tapering asset purchases will continue to drive mortgage rates higher, likely reaching 3.4% by December, says George Ratiu, manager of economic research for Realtor.com.
The Fed has been buying up tens of billions of dollars’ worth of Treasury bonds and mortgage-backed securities each month, but policymakers are expected to announce in early November that they’re pulling back on that strategy.
Rates are higher than they were a few weeks ago. And if you’re ready to lock, now is a good time to do so, writes Tim Lucas, editor of The Mortgage Reports. Rates are likely to keep going up from here.
Lucas points out that mortgage rates are still cheap — lower than they were before the pandemic. In January of last year, 30-year mortgages were averaging a lofty 3.72%.