As was expected, mortgage rates have increased again, putting them at the highest level seen since April 2011. Seattle Times reports on the change, which pushed the 30-year-fixed-rate up to 4.90 percent in a 19-basis-point jump (1 basis point = 0.01 percentage point), the “largest one-week spike in the 30-year rate since November 2016, when it increased 37 points.” Alternatively, fifteen-year rates reached 4.29 percent, up from 4.15 percent last week and 3.21 percent last year.
Over the past 45 years, interest rates on the 30-year fixed-rate mortgage have ranged from as high as 18.63% in 1981 to as low as 3.31% in 2012. Mortgage rates today remain at historical lows, 5.06%.
The Times notes that there are many factors that influence mortgage rates, but they are most significantly impacted by investors’ expectations. “A strong economy tends to cause home loan rates to increase,” the article reads. One way to gain insight into where rates may go is to look at yields on long-term investments, in particular 10-year treasury bonds: yields grew 3.23 percent last week, which has many anticipating additional rate increases on the horizon.
Rising mortgage rates impact buying power and according to the Times “the upturn in mortgage rates has begun to put a damper on the housing market.”
As Sam Khater, Chief Economist at Freddie Mac, said in a statement, “Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand. While the monthly payment remains affordable due to the still low mortgage rate environment, the primary hurdle for many borrowers today is the down payment, and that is the reason home sales have decreased in many high-priced markets.”
While the number of mortgage applications was down this month. But, as Mortgage Bankers Association President Bob Broeksmitt says, buyers are showing resilience, as in the past two months, “purchase applications have trended slightly higher than year-ago levels, with more room to grow if entry-level supply conditions approve.”