Rates Break 4% For The First Time Since 2019

Mortgage rates broke 4% for the first time since May 2019, Freddie Mac reported Thursday.

Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 4.16%. A year ago at this time, the 30-year FRM averaged 3.09%.

“The 30-year fixed-rate mortgage exceeded four percent for the first time since May of 2019,” said Sam Khater, Freddie Mac’s Chief Economist. 

“The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year. While home purchase demand has moderated, it remains competitive due to low existing inventory, suggesting high house price pressures will continue during the spring homebuying season.”

The Federal Reserve raised interest rates by a quarter-point this week, the first hike since 2018, in an effort to combat rising inflation. The impact on mortgage interest rates is expected to be felt immediately.

Rising interest rates should help with the affordable housing crisis by reducing demand and therefore moderating home price growth.

“Increasing mortgage rates alongside continued price growth results in reduced affordability, and that might cause house prices to moderate a little bit,” Odeta Kushi, chief economist at First American Financial Corporation, told Bankrate.

“The people struggling are the first-time homebuyers, who are trying to buy a home in an environment of historically high prices, potentially rising mortgage rates, and very limited inventory.”

Additional findings from Thursday’s report:

  • 15-year fixed-rate mortgage averaged 3.39% with an average 0.8 point.
  • A year ago at this time, the 15-year FRM averaged 2.40%.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.19% with an average 0.2 point.
  • A year ago at this time, the 5-year ARM averaged 2.97%.
Source: Freddie Mac