Mortgage rates flattened out after weeks of steadily rising, averaging 3.55% last week, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 3.55%. A year ago at this time, the 30-year FRM averaged 2.73%.
“Following a month-long rise, mortgage rates effectively stayed flat this week. Recent rate increases have yet to significantly impact purchase demand, as history demonstrates that potential homebuyers who are on the fence will often enter the market at the start of rate increase cycles,” said Sam Khater, Freddie Mac’s Chief Economist.
“We do expect rates to continue to increase but at a more gradual pace. Therefore, a fair number of current homeowners could continue to benefit from refinancing to lower their mortgage payment.”
In a video news conference after their two-day meeting earlier this week, Federal Reserve Chairman Jerome Powell said his members are “of a mind” to raise interest rates in March, “assuming conditions are appropriate for doing so.”
At least one economist says the Federal Reserve is already behind the inflation curve, and the mortgage industry should expect interest rate increases into 2023.
“Short-term interest rates will be pushed up by the Federal Reserve [in 2022], as the Fed announced,” Dr. Bill Conerly wrote in Forbes. “They will raise rates in quarter-point increments three or four times this year. They will still be behind the curve, most likely, and will raise short rates more aggressively in 2023.”
But rising rates don’t seem to be deterring homebuyers, at least in the early stages of rate increases. Redfin’s Homebuyer Demand Index was up 1% from last week and 9% year-over-year.
“The early spring is poised to be the hottest housing market on record; we may start to see most homes going under contract within two weeks, but these conditions are likely to be short-lived,” said Redfin Chief Economist Daryl Fairweather.
Additional findings from Thursday’s report:
- 15-year fixed-rate mortgage averaged 2.80% with an average 0.7 point.
- A year ago at this time, the 15-year FRM averaged 2.20%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.70% with an average 0.2 point.
- A year ago at this time, the 5-year ARM averaged 2.80%.