Mortgage rates rise, but remain below 3%



Volatile mortgage rates rose again last week, this time by four basis points to an average of 2.99%, according to data from Thursday. Freddie Macfrom PMMS. However, despite fluctuations in mortgage rates below 3%, borrowers are still competing in a market with limited supply and overheated.

“Home prices continue to rise while stocks remain low and new home construction cannot happen fast enough,” said Sam Hather, chief economist at Freddie Mac. “There are many potential home buyers who would like to take advantage of the low mortgage rates, but the competition is fierce. For homeowners, however, the continued low rates make refinancing worth considering. ”

The overall housing construction index hit its lowest level since February, Joel Kahn said. Mortgage Bankers AssociationDeputy Vice President for Economic and Industry Forecasting. Despite the fact that rates were below 3.2% in the last month, they are still about 20-30 basis points above record lows at the end of 2020.

“Insufficient housing inventory, obstacles to accelerating the pace of new construction and rapidly rising house prices continue to hold back buying activity,” Kahn said.

While the COVID-19 crisis kept mortgage rates low and limited inventories, these two factors also contributed to higher price increases as COVID-19 came amid a favorable housing market.

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“We have an increase in the number of buyers and a complete drop in inventories, which leads to an increase in house prices,” said Logan Mokhtasami, Lead Analyst at HousingWire. “In the last expansion, the only thing that kept the rise in home prices from taking off was higher mortgage rates from 4% to 5%. We currently have the lowest mortgage rates, so we don’t have this to weaken the market. ”

The market for new homes is not healthy, Mokhtasami said, but when mortgage rates rise, this sector will be hit harder than the existing domestic market, as always. This will not lead to a massive housing disaster, but it will affect construction in the future.

Secondary home sales in April paint a familiar picture: The market is still struggling with low supply as sales plummet for the third straight month, down 2.7% from March to 5.85 million. Last week’s data by unfinished home sales proved that, like new and existing sales, pending home sales were also under pressure from the depletion of housing stocks in April – a 4.4% drop from the previous month to 106.2, according to data National Association of Realtors.


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