Long-term home loan rates continue sharp uptick amid rapidly rising inflation
The average 30-year fixed-rate mortgage (FRM) has surged to its highest reading since 2018, but some factors suggest that the US housing boom may be far from over.
The long-term mortgage rate jumped 25 basis points to 4.67% for the week ending March 31, Freddie Mac reported Thursday. At the same time a year ago, the 30-year FRM was 3.18%. While it is typical for higher mortgage rates to discourage prospective buyers from purchasing homes, Freddie Mac chief economist Sam Khater noted that there are ample signs that their appetite for real estate is still strong.
“Purchase demand has weakened modestly but has continued to outpace expectations. This is largely due to unmet demand from first-time homebuyers as well as a select few who had been waiting for rates to hit a cyclical low,” Khater said.
The 15-year fixed-rate mortgage averaged 3.83%, up from 3.63% last week. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.50%, up from 3.36% the week before.
“The flatness of the treasury curve should have an impact on new adjustable-rate mortgage (ARM) offerings relative to 15-year and 30-year fixed mortgage rates,” Robert Heck, vice president of mortgage at Morty, told MPA in an email. “This being said, ARMs have been slower to move relative to the recent uptick in rates, which is largely driven by the bank backing of these products and could cause them to be a strong option in the short term.”
“Looking ahead to the spring market, the combination of rising interest rates, continued low supply and rising inflation could slow the housing market from the heights it’s seen in recent months, even if prices continue to rise,” Heck added.