The 30-year fixed-rate Mortgage averaged 3.45% in the week ending January 13, up from an average of 3.22% the week before. This is the highest the average rate has been since March 2020, when it hit 3.5%. The rate jump was driven by expectations that the Federal Reserve will more quickly rein in its monetary stimulus measures in response to inflation pressure.
Sam Khater, Freddie Mac’s chief economist, said that the Mortgage rates rose across all loan types, with the 30-year fixed-rate increasing by almost a quarter of a percent from last week. “The rise in rates this year has not yet affected purchase demand, but given the fast pace of home price growth, it will likely drain demand shortly.
Consumer prices rose at the fastest pace in 40 years in December. George Ratiu, Realtor.com’s manager of economic research, said that the Mortgage interest rises because the economy is improving. Buyers of a median-priced home are paying $219 more per month than a year ago. This is adding over $2,600 to their yearly housing costs at today’s rate.
Despite the high number of cases, the mild impact of the Omicron wave points toward a brighter post-pandemic horizon, a sentiment that underpins a more bullish outlook on the economy. The rising Mortgage rates, together with near-record low inventory and higher home prices, may push some buyers out of the market.According to the Bankers Association, applications rose slightly from the week before. So many people are looking to buy a home, Joel Kan, MBA’s associate vice president of economic and industry forecasting, said he expects the number of applications for a new Mortgage to remain robust.