The average interest rate on a 30-year fixed-rate loan rose to 4.67%, mortgage finance giant Freddie Mac said on Thursday, marking the weekly figure’s highest since December 2018.
The 30-year fixed rate rose from 4.42% a week ago, continuing its steady climb that has brought home loan rates within sight of 5% for the first time in four years. This year’s rise in mortgage rates was hardly unanticipated given record lows hit during the pandemic and concerns over high US inflation numbers, but it has come faster than expected. At the start of the year, the average interest rate on America’s most popular home loan was 3.22%.
Higher mortgage rates typically slow homebuyers, but the number of applications submitted by hopeful homebuyers has increased in three of the last four weeks, according to the Mortgage Bankers Association, showing the U.S. housing boom is far from over.
“It’s going to take a pretty healthy hike in interest rates to dampen demand,” said Phil Shoemaker, president of lending at Homepoint Financial Corp., a Michigan-based mortgage lender.
Expectations that the US Federal Reserve will raise interest rates several times this year to control inflation are driving mortgage rates higher. Before the central bank hiked rates for the first time since 2018, the Fed’s decision to withdraw its purchases of mortgage-backed securities had begun to push rates higher.
Home prices continue to push homeownership into question for many Americans. The median selling price of an existing home rose 15% year over year in February.
Rising interest rates are reducing the refinancing that fueled much of the mortgage market boom in 2020 and 2021. About 4 million Americans could reduce their monthly mortgage payments by refinancing in February, compared with nearly 16 million a year ago, according to mortgage-data firm Black Knight Inc.
According to the Mortgage Bankers Association, refinancing is expected to account for 33% of mortgage origination this year, up from 59% in 2021.
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https://www.wsj.com/articles/mortgages-rates-surge-to-highest-since-2018-11648735335?mod=rss_markets_main Mortgage rates climb to highest levels since 2018