Mortgage Rates Jump Almost 1/4 Point – to 3.45%

The Fed announced it would tighten monetary policy more quickly, which pushed the 30-year, fixed-rate mortgage higher compared to last week’s 3.22%.

SILVER SPRING, Md. (AP) – Average long-term U.S. mortgage rates jumped again this past week, reaching their highest level since March 2020, just as the coronavirus pandemic was breaking in the U.S.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the benchmark 30-year home loan rose to 3.45% this week from 3.22% last week. It was at 3.5% in late March of 2020 when the pandemic was just starting. A year ago, the 30-year rate stood at 2.79%.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, rose to 2.62% from 2.43% last week.

“This was driven by the prospect of a faster than expected tightening of monetary policy in response to continued inflation exacerbated by uncertainty in labor and supply chains,” said Sam Khater, Freddie Mac’s chief economist. “The rise in mortgage rates so far this year has not yet affected purchase demand, but given the fast pace of home price growth, it will likely dampen demand in the near future.”

Available housing has been in short supply since long before the pandemic started, and prices have risen close to 20% in the past year. Higher mortgage rates could make it even harder for homebuyers to secure a new home.

Mortgage rates have been expected to rise this year after the Federal Reserve announced last month that it would begin dialing back its monthly bond purchases – which are intended to lower long-term rates – to slow accelerating inflation. But even with the expected three or four rate increases in 2022, the Fed’s benchmark rate would still be historically low at around 1%.

On Wednesday, the government reported that inflation spiked to 7% in December from a year earlier, the sharpest such increase in four decades. Earlier Thursday, the Labor Department reported that prices at the wholesale level surged by a record 9.7% in December from a year earlier.

In addition to surging inflation, experts expect robust economic growth and the tight labor market to continue to push rates higher.

Although U.S. jobless claims climbed by 23,000 last week to 230,000, it’s still low by historic standards, and the highly contagious omicron variant doesn’t appear to have triggered layoffs yet.

**Published with permission of the National Association of Realtors.

Mortgage Rates Hit 3.22%, Highest Level in 20 Months

Jan 6, 2022 – The 30-year, fixed-rate loan rose from last week’s average 3.11%. A year ago, the FRM was 2.65%, though this week’s average remains low by historical standards.

WASHINGTON (AP) – Average long-term U.S. mortgage rates rose in the past week to start the new year. They reached their highest level since May 2020, at the height of the coronavirus pandemic, yet remained historically low.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the benchmark 30-year home loan increased to 3.22% this week from 3.11% last week. A year ago, the 30-year rate stood at 2.65%.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, rose to 2.43% from 2.33% last week.

Many economists expect mortgage rates to rise this year after the Federal Reserve announced last month that it would begin dialing back its monthly bond purchases – which are intended to lower long-term rates – to tamp down accelerating inflation. But even with the expected three rate increases in 2022, the Fed’s benchmark rate would still sit below 1%.

In addition to stronger inflation, experts expect robust economic growth and a tight labor market to continue to push rates higher.

The government reported Thursday that the number of Americans applying for unemployment benefits rose last week but remained at historically low levels, suggesting that the job market remains strong. U.S. jobless claims rose by 7,000 last week to 207,000.

The highly transmissible omicron variant so far does not appear to have triggered significant layoffs.

Employers are reluctant to let workers go at a time when it’s so tough to find replacements. The U.S. posted 10.6 million job openings in November, the fifth-highest monthly total in records reaching back to 2000. A record 4.5 million Americans quit their jobs in the “Great Resignation” in November – a sign that they are confident enough in their prospects to seek something better.

The job market has bounced back from last year’s brief but intense coronavirus recession. When COVID hit, governments ordered lockdowns, consumers hunkered down at home and many businesses closed or cut back hours. Employers slashed more than 22 million jobs in March and April 2020, and the unemployment rate rocketed to 14.8%.

**Published with permission of the National Association of Realtors.

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