WASHINGTON D.C.: According to a closely watched survey, U.S. mortgage rates have reached levels not seen since March 2020.
In addition, borrowing costs, which most experts predict will only increase as the economy further recovers, are encouraging borrowers to lock in today's mortgage rates, which are still historically low.
Freddie Mac reported average interest rates on a 30-year fixed-rate mortgage rose to 3.45 percent last week, up from 3.22 percent the previous week, which is the highest since the week of 26th March, 2020.
One year ago, before the onset of current inflation levels, the 30-year rate was averaging 2.79 percent, just above the all-time low of 2.65 percent in the first week of January 2021.
Amidst a surge in demand for consumer products and ongoing supply chain issues, the U.S. government reported, last week, that inflation in 2021 surged 7 percent, reaching a 40-year high.
"Mortgage rates rose across all mortgage loan types, with the 30-year fixed-rate mortgage increasing by almost a quarter of a percent" from the previous week's average of 3.22 percent," said Sam Khater, Freddie Mac's chief economist.
Last week, the rate on a 15-year fixed-rate mortgage averaged 2.62 percent, up from 2.43 percent one week earlier, Freddie Mac added.
One year ago, shorter-term loans were averaging 2.23 percent, while last week the rate on a five-year adjustable-rate mortgage (ARM) averaged 2.57 percent, up from 2.41 percent in the previous week.
This time last year, five-year ARMs were averaging 3.12 percent.
According to the latest report of the Mortgage Bankers Association, applications for homebuyer purchase loans rose, indicating homebuyers seem to have understood the message that rates are not likely to decline soon.
"Buyers are pouring into the market to claim a home before mortgage rates rise further, as new listings slow to a trickle," added Daryl Fairweather, chief economist at the real estate brokerage Redfin, as quoted by Moneywise.
George Ratiu, manager of economic research for Realtor.com, noted that at today's 30-year mortgage rates, buyers of a median-priced home already are paying some $219 more per month than one year ago, or over $2,600 annually.
In addition, refinance loan applications from homeowners are at their lowest point since January 2020.
Joel Kan, the lead economic and industry forecaster for the Mortgage Bankers Association, said, "Rates at these levels are quickly closing the door on refinance opportunities for many borrowers."