WASHINGTON (AP) – Average long-term U.S. mortgage rates jumped again last week, approaching levels not seen since 2019.
The average rate on a 30-year loan rose last week to 3.92% from 3.69% the previous week, mortgage buyer Freddie Mac reported Thursday. A year ago, the long-term rate was 2.81%.
The last time the 30-year rate was higher was in May of 2019 when it reached 3.99%.
The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, rose to 3.15% from 2.93% one week earlier. It stood at 2.21% a year ago. It last breached 3% in March of 2020, just at the pandemic was breaking in the U.S.
The Federal Reserve has signaled that it would begin the first in a series of interest rate hikes in March, reversing pandemic-era policies that have fueled hiring and growth but also contributing to inflation levels not seen since the early 1980s.
The Labor Department reported last week that consumer prices jumped 7.5% last month compared with 12 months earlier, the steepest year-over-year increase since February 1982. Higher costs for nearly everything has burdened consumers, offsetting pay raises and reinforcing the Federal Reserve’s decision to begin raising borrowing rates across the economy.
The price for a new home has jumped about 14% in the past year and as much as 30% in some cities. Housing has been in short supply even before the pandemic, and higher prices and rising interest rates will make it even harder for homebuyers.
“As rates and house prices rise, affordability has become a substantial hurdle for potential homebuyers, especially as inflation threatens to place a strain on consumer budgets,” said Sam Khater, Freddie Mac’s chief economist.
Massive focus on the impact that rising mortgage rates may have on the US economy.
Obviously, it depends on which rate you are looking at, but most go for the fixed rate option, which is repricing fast now.
white = 30-year fixed
yellow = 5Y ARM pic.twitter.com/zj6k7imCPg— Jens Nordvig (@jnordvig) February 15, 2022
Er, about that. Sharp fall in new home price in December https://t.co/YgsMXALfMK pic.twitter.com/iSCt52NSwg
— PPG (@PPGMacro) February 16, 2022
This is one of the most underappreciated stats at the moment: Some 1.543 million homes are currently under construction (single- and multi-family units), the most since 1973 pic.twitter.com/B4azP45ogw
— Robert Burgess (@BobOnMarkets) February 17, 2022
US Housing – Homes under construction relative to the 25-54 year-old working population. Higher than at the peak of the housing boom…. pic.twitter.com/t62lie6Uea
— PPG (@PPGMacro) February 17, 2022
Tweeted these in early 21 when it was clear that ppl were under-appreciating how tight the resale market was becoming. Spidey senses r tingling. Increasingly convinced that back half of this yr is going to look very very differenthttps://t.co/lAYyJISXMRhttps://t.co/0HDLd6uIaZ
— Ben Rabidoux (@BenRabidoux) February 16, 2022