With widespread uncertainty about the path of inflation and the Fed publicly mulling its own rate hikes and bond tapering, mortgage rates began moving upward this week, jumping 0.12% in the space of a week to 3.10%, according to a new survey from Freddie Mac.
“The combination of rising inflation and consumer spending is driving mortgage rates higher,” said Sam Khater, Freddie Mac’s chief economist in a statement. “Shoppers looking to buy a home are fueling strong demand while ongoing inventory shortages are not improving in the presence of higher home prices.”
Following historic lows for more than a year, mortgage rates are expected to begin normalizing as the broader economy recovers from the pandemic. But observers have anxiously watched this metric, with concerns about a potential dampening of the overall housing market.
A year ago, the 30-year fixed sat at a staggering 2.72% according to the survey, which helped fuel a runaway hot housing market. But with inventory shortages caused by a global supply chain disruption still weighing heavily on the real estate market, many continue to wonder how bumpy the path to normalization will be.
“This reality illustrates the challenging situation facing the housing market,” said Khater.
But Lawrence Yun, chief economist for the National Association of REALTORS® is predicting that these challenges will not upend the housing market, instead anticipating that real estate investment will continue to serve as a hedge against rising inflation.
The Freddie Mac survey also saw the 15-year fixed rate climb to 2.39%, also up 0.12%.