It’s been another week of increasing mortgage rates, with the average 30-year fixed-rate mortgage (FRM) coming in at 3.09%, according to the latest data from Freddie Mac.
Interest rates have hit their highest level since mid-May, but the housing market should remain relatively healthy despite their upward trajectory.
“Mortgage rates continued to rise this week due to the trajectory of both the economy and the pandemic,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “Even as the availability of existing homes is improving, prices remain high due to homebuyer demand and limitations on housing starts and permits resulting from the ongoing labor and material shortages. Despite these countervailing forces, we expect the housing market to remain strong as we head into the end of the year.”
According to realtor.com® manager of Economic Research George Ratiu, the industry expects that the Fed’s tapering of asset purchases, combined with rising inflation, will continue to drive rates higher. The company expects rates to reach 3.4% by December.
“The rate rose four basis points to 3.09%, as investors and markets are digesting the fact that the massive monetary stimulus of the past eighteen months has materialized in higher prices across the board,” said Ratiu in a statement.
“Real estate markets are settling into a more typical seasonal groove as we progress through October, with the overheated price growth of early 2021 cooling,” added Ratiu. “There are still more hopeful buyers than available homes for sale, even as properties are spending slightly longer on the market. In turn, price growth has slowed, rising 8.6% this past week compared to last year’s double-digit pace. However, rising mortgage rates are squeezing many first-time buyers’ budgets. Buyers of a median-priced home who lock in today’s rate will spend $145 per month more than they would have a year ago, adding over $1,700 to their yearly payments.”