Long-term U.S. rates on mortgages crept higher this week, marking the eighth straight week that it will cost more to borrow to purchase a house. Mortgage buyer Freddie Mac said Thursday that the average rate on 30-year fixed-rate mortgages rose to 4.43% this week from 4.40% a week ago. The new average for the benchmark rate is the greatest since January 2014. The 30-year rate stood at 4.10% last year.
U.S rates on mortgages increase for 8th week; 30-year at 4.43%
The rate on 15-year, fixed-rate loans advanced to 3.90% from 3.85% a week ago. Rates on mortgages have risen steadily in January and February, as the interest rates will generally increased as a result of higher levels of government debt and expectations of rising inflation. And additionally discouraging potential home buyers, rising rates may also prompt potential sellers to hold on to their homes, which are financed through lower interest rates.
Rates on mortgages closely track the yield on 10-year U.S. Treasury notes, which have climbed to 2.85% as of Thursday from 2.46% at the beginning of the year.
Testimony to Congress on Tuesday by the new Federal Reserve chairman, Jerome Powell, conveyed optimism concerning the economy’s strength and held to the Fed’s projection of three hikes this coming year in its key policy rate. Many private economists say they now expect the central bank to increase rates 4 times this year instead of three.
Home affordability is now increasingly problematic for a growing number of would-be buyers. The latest jump in rates on mortgages has expanded their monthly costs, limiting just how much they can pay for a house. Average home price increases are eclipsing wage growth. Additionally, the shrinking number of homes for sale is leaving a greater number of these prospective buyers dismayed at being unable to locate a property that works for them.
The pace of Americans signing contracts to purchase homes fell 4.7% in January to its lowest level in more than 36 months, as a result of not enough homes for sale, higher prices and rising rates on mortgages, the National Association of Realtors reported Wednesday.
To calculate average rates on mortgages, Freddie Mac surveys lenders nationwide between Monday and Wednesday every week.
The typical doesn’t include extra fees, generally known as points, which most borrowers have to pay to get the lowest rate. The fees on 30-year and 15-year fixed-rate loans were 0.5%, unchanged from a week ago. Fees for five-year adjustable mortgages also held steady, at 0.4%.
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