Buckle up for 4% interest rates, because they may be coming soon.
Freddie Mac released its latest Primary Mortgage Market Survey (PMMS), showing that the 30-year fixed-rate mortgage (FRM) reached an average of 3.92%, for the week ending February 17, 2022.
Key findings:
- 30-year fixed-rate mortgage averaged 3.92% with an average 0.8 point for the week ending February 17, 2022, up from last week when it averaged 3.69%. Last year during the same period, the average was 2.81%.
- 15-year fixed-rate mortgage averaged 3.15% with an average 0.8 point, up from last week when it averaged 2.93%. The 15-year FRM averaged 2.21% during the same period last year.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.98% with an average 0.3 point, up from last week when it averaged 2.80%. A year ago at this time, the 5-year ARM averaged 2.77%.
Expert takeaway:
“The Freddie Mac fixed rate for a 30-year loan continued to climb this week, hitting 3.92%, the highest rate since May 2019,” said chief economist of realtor.com®, Danielle Hale. “This rise followed along with 10-year Treasuries, which are on track to exceed 2.0% for the first week since July 2019. Persistent inflation coupled with strong recent economic reports has raised market expectations of a 50 basis-point Fed funds rate hike in March, pushing longer-term rates up in anticipation of this possibility.
New construction continues at a high level, but – as buyers grappling with fast-selling homes and still-rising prices can attest – it’s not yet shifting the balance in the housing market. With a decade-long deficit of 5.8 million single-family homes relative to new households, the housing market is likely to stay competitive for the next several years. Rising home prices combined with limited inventory created affordability double-trouble with fewer homes affordable to buyers based on their income level. This was the case before mortgage rate increases, which have upped the monthly cost of the typical $375,000 home listing by nearly $150 since December for borrowers putting 20% down. Looking ahead, we expect rising incomes to help home shoppers navigate rising housing costs, but buyers will also likely have to make compromises to be successful.”
