Key mortgage rates surged above the 3% mark again as bond markets reacted to indications that the Federal Reserve may raise rates earlier than previously expected.
30-year fixed rate mortgages averaged 3.02% for the week ending June 24, up nine basis points from the previous week, Freddie Mac
reported on Thursday… For the first time since the end of April, the base rate rose above 3%.
Meanwhile, 15-year fixed-rate mortgages rose 10 basis points to an average of 2.34%. The five-year adjustable rate mortgage, indexed by the Treasury, averaged 2.53%, up one basis point from the previous week.
Mortgage rates are roughly the same as the yield on long-term bonds, including 10-year Treasuries.
Announcements from the Federal Reserve and central bank policymakers suggested that the Fed could take steps to raise interest rates earlier than previously expected, in light of the rising inflation that the economy has seen during the recovery from the pandemic. These announcements have resulted in long-term bond yields rising several points over the past week.
“In general, after a short upward push, markets again seem to be on hold, waiting for the next news that could push yields and rates in one direction or another,” said Matthew Speakman, an economist at Zillow. “And they may not have to wait long as inflation data for May will be released on Friday.”
found that only 22% of homeowners refinanced their mortgages in the past year, despite the fact that those who chose to refinance saved at least $ 300 a month in mortgage payments.
“As the economy develops and inflation remains high, we expect rates to continue to rise gradually in the second half of the year,” Freddie Mac chief economist Sam Hather said in the report. “For those homeowners who haven’t refinanced yet – and there are many borrowers who could benefit from it – now is the time.”
Rising rates are also posing serious problems for home buyers. Housing prices continue to rise at a breakneck pace and the average price of an existing home has hit an all-time high. The combination of rising rates and rising prices could push many Americans out of the real estate market, which could extend the downturn in home sales seen in recent months.
“Buyers are running out of steam,” said George Ratiu, senior economist at Realtor.com. He added that the housing market is desperate for more homes to keep prices down. “Without additional supplies, favorable financing is just a chair on one leg trying to provide a shaky foundation for sustainable growth,” he said.