Benchmark rate rises above 4% for the first time in nearly three years.
The 30-year mortgage rate climbed above the 4% mark shortly after the Federal Reserve approved its first interest rate hike in more than three years.
Freddie Mac reported that the 30-year fixed-rate mortgage averaged 4.16% for the week ending March 17, a significant jump from 3.85% a week ago. At this time last year, the benchmark rate was only 3.09%.
“The 30-year fixed-rate mortgage exceeded 4% for the first time since May of 2019,” said Sam Khater, chief economist at Freddie Mac. “The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year.”
The 15-year fixed-rate mortgage is now 30 basis points higher than a week ago, up to 3.39%. The five-year Treasury-indexed hybrid adjustable-rate mortgage jumped from 2.97% to 3.19%.
The spike in mortgage rates has already started to hamper mortgage application activity. According to data from the Mortgage Bankers Association, overall mortgage apps dropped 1.2% week over week, with refinance activity declining by 3% and purchase applications edging down by 1%.
“While home purchase demand has moderated, it remains competitive due to low existing inventory, suggesting high house price pressures will continue during the spring home buying season,” Khater said.