The 30-year fixed-rate mortgage rate hit a new high of 3.92% this week, which is significantly higher than it was a year ago.
This week’s interest rates are much higher:
This week’s survey from Freddie Mac showed that the 15-year fixed-rate mortgage rate also increased to 3.15%. The rate on the 5/1 adjustable-rate mortgage also rose to 2.98%.
The rate on the 30-year fixed-rate loan remained at 3.92% this week. It’s up from last week’s rate of 3.96%.
The 15-year fixed-rate mortgage rate is currently at 3.15%, which is up by 0.35 percentage points from last week.
The 5/1 adjustable-rate mortgage rate is currently at 2.98%, which is higher by 0.11 percentage points from last week.
Sam Khater, the chief economist of Freddie Mac, noted that the rise in mortgage rates was largely due to higher inflation and stronger-than-expected consumer spending. He said that rising prices and interest rates have become a substantial barrier for potential home buyers.
If you’re planning on buying a home with a purchase price of $250,000, you’ll end up with a loan balance of $200,000 after making a 20% down payment. with a 3% interest rate, the monthly payment would be $843. If the rate increases to 4%, the payment would be $955. At 8%, the payment would be $1,468.
A home affordability calculator can help you determine the amount of money you may need to borrow based on various factors such as your income and debt-to-income ratio.
Will current mortgage rates last?
Following last week’s uptick in inflation, which was at 7.5%, market participants are expecting the Federal Reserve to raise its key interest rate by 0.50 percentage points in March.
If the Fed proceeds with its plan to raise the rate, it’s widely expected to increase the cost of home loans for potential buyers.
Doug Duncan, an economist for Fannie Mae, noted that rising mortgage rates would erode the affordability of home purchases. He also said that the lack of housing supply would support the market.
According to Duncan, higher interest rates and the tighter monetary policy that’s expected to follow will have a negative effect on the housing market.
The 10-year Treasury note’s yield dropped to 2.024% this morning, but it still has a 1.8 percentage point spread between it and the 30-year fixed rate.
How are mortgage rates impacting home sales?
The number of mortgage applications declined for the fifth straight week in February. The decline was attributed to a drop in refinancing activity.
The number of mortgage applications filed for purchase loans decreased by 1% from the previous week. The decline was also attributed to the drop in refinancing activity.
The average size of a mortgage loan increased to $453,000, which was a new record high.