Rates on home loans reached their highest level in nearly three years this week, escalating what is expected to be a difficult spring season in the hot housing market. Mortgage interest rates are no longer at an all-time low. Inflation and global conflict drove the 30-year fixed average to a high not seen since May 2019.
4.16% mortgage, to increase by the end of the year
According to Freddie Mac, the average US fixed rate for a 30-year mortgage increased this week to 4.16 percent. It is a far plea from last year when borrowers were offered rates as low as 3.09 percent. However, experts predict mortgage rates will continue to rise through the end of the year, fueled by the Federal Reserve’s interest rate hike announced Wednesday, Business Insider wrote.
With an average of 0.8 points, the 15-year fixed-rate average increased to 3.39 percent. It was 3.09 percent a week ago and 2.4 /percent a year ago. The five-year adjusted rate average increased by 0.2 points to 3.19 percent. It was 2.97 percent a week ago, and it was 2.79 percent a year ago, according to North Bay Business Journal.
Mortgage rates have already risen dramatically ahead of the [Federal Reserve] meeting, according to Holden Lewis, a home and mortgage expert at NerdWallet. Mortgages, however, still have room to rise as the Fed is predicted to raise short-term interest rates several more times this year.
Mortgage applications decline, interest rates rise
According to the MBA, refi applications dropped 3% from the previous week and down 49% from a year ago. The seasonally adjusted purchase index rose 1% from the last week; the unadjusted purchase index increased 2% from the previous week but was 8% lower than the same week a year ago, owing to a decrease in inventory, housingwire.com reported.
Purchase applications slightly rose, with both conventional and VA loan applications increasing, according to Kan. For example, the average loan size for a purchase application stayed elevated at $453,200, the second-highest amount in the MBA survey. According to the MBA, adjustable-rate mortgage activity increased to 5.6 percent of total applications.
The FHA share of total applications remained unchanged over the past week at 8.7 percent, while the VA share grew to 10.5 percent from 10.4 percent. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances for 80 percent LTV loans rose to 4.02 percent from 3.79 percent. The effective rate has been increased since last week.