Mortgage rates have dropped 4 percent for the first time in 3 years.
Mortgage rates rose 4 percent this week for the first time in nearly three years — and are expected to continue climbing.
According to Freddie Mac, the 30-year fixed-rate mortgage rate averaged 4.16 percent for the week through March 17, the first time it exceeded 4 percent since May 2019. It was 3.85 per cent a week ago and 3.09 per cent a year ago.
Rates remain stable thanks to a 40-year high in inflation, which the Federal Reserve is trying to contain by raising interest rates. On Wednesday, the Fed raised its benchmark rate by a quarter of a percentage point, the first increase since 2018, and it signaled that six more similar-sized increases were on the way.
Mortgage rates don’t move in lock step with Fed benchmarks — they track the yield on 10-year Treasury bonds instead. This figure is influenced by a variety of factors, including the inflation rate, the actions of the Fed, and how investors react to them.
“The signal that the Federal Reserve continues to raise short-term rates further means that mortgage rates should continue to rise through the year,” Sam Khatter, chief economist at Freddie Mac, said in a statement.
“While home purchase demand has moderated, it remains competitive due to low current inventory, suggesting that higher home price pressures will continue during the spring home buying season,” he said.
The average rate on 30-year term mortgages came down to 2.65 percent in January 2021.
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