Last time rates were above 3% was June
The average 30-year-fixed mortgage rate rose 13 basis points to 3.01% for the week ending Sept. 30, according to Freddie Mac’s latest PMMS survey. Mortgage rates had been roughly flat for seven weeks, and this is the first time it rose above 3% since June.
Sam Khater, Freddie Mac’s chief economist, said in a statement that rates rose across all loan types, in conjunction with the 10-year U.S. Treasury yield, which also reached its highest point since June.
“Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation and emerging energy supply shortages which compound other labor and materials shortages,” Khater said.
According to Khater, mortgage rates are expected to continue to rise modestly which will likely
have an impact on home prices, causing them to moderate slightly after increasing over the last year.
The previous week, rates increased slightly to 2.88% from 2.86%, essentially the second consecutive month of consistent mortgage rates.
A year ago at this time, the 30-year fixed-rate mortgage averaged 2.88%. The 15-year fixed-rate mortgage averaged 2.28%, up from last week when it averaged 2.15%.
Mortgage rates have remained low in large part because of the Federal Reserve’s consistent monthly purchases of $120 billion in U.S. Treasury bonds and mortgage-backed securities. Last week, the central bank signaled it would reduce the program when substantial progress is made in the labor market.
On Thursday, the Mortgage Bankers Association (MBA) showed that the central bank’s announcement quickly led to a rise in mortgage rates, impacting the behavior of buyers seeking their dream home or looking to reduce their monthly payments through mortgage refinancing.
According to the MBA, the mortgage loan application volume declined by 1.1% for the seven days ending Sept. 24. Joel Kan, associate vice president of economic and industry forecasting at MBA, said that Treasury yields increased due to optimism about the strengthening economy. In response, “mortgage rates rose across all loan types, with the benchmark 30-year fixed rate reaching its highest level since early July 2021,” he said.
Kan noted that the appreciation of home prices, which have steadily been going up for over a year now, had also depressed mortgage applications though the purchase market is still strong overall.
Source: housingwire.com | By Flávia Furlan Nunes