Mortgage rates continue to rise, up to an average of 3.56% from 3.45%, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 3.56%. A year ago at this time, the 30-year FRM averaged 2.77%.
“Mortgage rates moved up again as the 10-year U.S. Treasury yield rose and financial markets adjusted to anticipated changes in monetary policy that will combat inflation,” said Sam Khater, Freddie Mac’s Chief Economist.
“As a result of higher mortgage rates, purchase demand has modestly waned in advance of the spring homebuying season. However, supply remains near historically tight levels and home prices remain high, keeping the market competitive.”
Inventory reached a record low in December, down 19.5% year-over-year and 40.5% from December 2019, according to Zillow’s latest market report. New listings dropped 18.9% just from November to December.
Affordability continues to pose a challenge, especially for first-time homebuyers forced to compete with buyers drawing on equity from their current homes or seeking non-primary residences. There are 45 million millennials aged 26 to 35, prime first-time homebuying age.
“The ongoing supply shortage continues to put upward pressure on house price appreciation as buyers compete to buy what few homes are for sale. You can’t buy what’s not for sale, but you will compete for what is,” Chief First American Economist Mark Fleming said regarding Millennials propelling the market.
“Rapid house price appreciation and its differing impact on existing and first-time homebuyers will persist until the supply and demand imbalance improves. In the game of housing musical chairs, it’s clear the housing market needs more chairs.”
Additional findings from Thursday’s report:
- 15-year fixed-rate mortgage averaged 2.79% with an average 0.6 point.
- A year ago at this time, the 15-year FRM averaged 2.21%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.60% with an average 0.3 point.
- A year ago at this time, the 5-year ARM averaged 2.80%.