Mortgage rates jumped to 3.92% from 3.69% this week, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 3.96%. A year ago at this time, the 30-year FRM averaged 2.81%.
“Mortgage rates jumped again due to high inflation and stronger than expected consumer spending,” said Sam Khater, Freddie Mac’s Chief Economist.
“The 30-year fixed-rate mortgage is nearing four percent, reaching highs we have not seen since May 2019. As rates and house prices rise, affordability has become a substantial hurdle for potential homebuyers, especially as inflation threatens to place a strain on consumer budgets.”
Demand remains high despite rising rates. Rate locks for purchase loans increased 19.9% month-over-month in January.
“The significant jump in purchase originations can likely be attributed in part to typical pent-up, post-holiday demand. It could also represent skittish homebuyers hoping to lock in a still historically low rate being spurred to action by the quick acceleration in 30-year offerings over the opening weeks of the month,” said Scott Happ, president, Optimal Blue, a division of Black Knight.
Nicole Bachaud, a Zillow economist, expects rate hikes and accelerating appreciation to price some buyers out of the market, eventually cooling home price appreciation.
“We’re seeing monthly growth accelerate earlier in the year than normal, but we don’t expect they’ll rise quite as much as they did in 2021,” Bachaud said.
Additional findings from Thursday’s report:
- 15-year fixed-rate mortgage averaged 3.15% with an average 0.8 point.
- A year ago at this time, the 15-year FRM averaged 2.93%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.98% with an average 0.3 point.
- A year ago at this time, the 5-year ARM averaged 2.77%.