The uptick in mortgage rates will make the spring homebuying season especially hard for first-time buyers
Mortgage interest rates have increased for the seventh consecutive week, according to Freddie Mac’s latest Primary Mortgage Market Survey. The 30-year fixed mortgage rate reached 4.40 percent — the highest since April of 2014.
According to the survey:
- The average rate for a 30-year fixed-rate mortgage was 4.40 percent, up from 4.38 percent the previous week. A year ago at this time, this rate averaged 4.16 percent.
- The average rate for a 15-year fixed-rate mortgage was 3.85 percent, up from 3.84 percent the week prior. This rate averaged 3.37 percent at the same time last year.
- The average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage was 3.65 percent, up from 3.63 percent. A year ago, this rate averaged 3.16 percent.
Freddie Mac deputy chief economist Len Kiefer says the steady increases in mortgage interest rates is expected to continue as the Federal Reserve increases short-term rates.
“Mortgage rates have followed U.S. Treasurys higher in anticipation of higher rates of inflation and further monetary tightening by the Federal Reserve,” Kiefer said in a press release. “Following the close of our survey, the release of the FOMC minutes for February 21, 2018 sent the 10-year Treasury above 2.9 percent.”
“If those increases stick, we will likely see mortgage rates continue to trend higher,” he added.
Realtor.com director of economic research Javier Vivas says the increase in mortgage rates signals the beginning of an uber-competitive spring buying season where buyers with large down payments and better credit will edge out everyone else.
Despite those factors, Vivas says overall buyer demand will remain strong, thanks to wage increases.
“Demand for homes is likely to remain as persistent as ever this spring,” he said in an emailed statement. “While rising rates provoke buyer anxiety and decrease affordability, the desire to purchase a home is driven by income and family changes and will likely remain untouched by rising mortgage rates.”
Article image credited to Tiano Rodrigues