Interest Rates Jump to 3.45%

Mortgage rates jumped significantly this week, up to an average of 3.45% from 3.22%, Freddie Mac reported Thursday.

Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 3.45%. A year ago at this time, the 30-year FRM averaged 2.79%.

“Mortgage rates rose across all mortgage loan types, with the 30-year, fixed-rate mortgage increasing by almost a quarter of a percent from last week,” said Sam Khater, Freddie Mac’s Chief Economist.

“This was driven by the prospect of a faster than expected tightening of monetary policy in response to continued inflation exacerbated by uncertainty in labor and supply chains. The rise in mortgage rates so far this year has not yet affected purchase demand, but given the fast pace of home price growth, it will likely dampen demand in the near future.”

Industry experts expect home prices to continue growing in 2022, though at a slower pace than 2021’s record-breaking frenzy. The Mortgage Bankers Association has predicted that purchase mortgage originations will grow 9% in 2022 to $1.73 trillion. 

“Over the past year, low mortgage rates plus government stimulus programs helped increase mortgage demand, but the bidding-up of homes increased prices to record levels, making affordability a greater constraint for both first-time and move-up homebuyers,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.

“Even though demand remains strong, a majority of consumers clearly have reservations about purchasing a home at current prices.”

Additional findings from Thursday’s report:

  • 15-year fixed-rate mortgage averaged 2.62% with an average 0.7 point.
  • A year ago at this time, the 15-year FRM averaged 2.23%.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.57% with an average 0.3 point, unchanged from last week.
  • A year ago at this time, the 5-year ARM averaged 3.12%.