Mortgage Rates

Charges For 30-Yr Mortgages Attain Highest Level Since Early Spring

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Mortgage rates continued their month-long rise in mid-October as buyers and sellers navigated unusual market conditions.

30-year mortgage rates hit their highest level since April earlier this week as the US housing market continued to experience a host of unprecedented conditions.

A month of strong growth took 30-year mortgage rates from 2.88 percent in mid-September to 3.09 percent in Freddie Mac’s lender survey this week.

“Mortgage rates continued to rise this week due to developments in both the economy and the pandemic,” Freddie Mac chief economist Sam Khater said in a statement. “Even as the availability of existing housing improves, prices remain high due to demand from home buyers and restrictions on construction and permits due to ongoing labor and material shortages.”

For the week ending October 21, Freddie Mac’s weekly Primary Mortgage Market Survey reported average interest rates on the following types of loans:

  • To the 30-year fixed-rate mortgages, the rates averaged 3.09 percent with an average of 0.7 points, compared to 3.05 percent in the previous week and above the mark of 2.80 percent a year ago. Interest rates on 30-year loans hit an all-time low of 2.65 percent in the week ending January 7, 2021, according to records from 1971.
  • Prices on 15-year fixed-rate mortgages an average of 2.33 percent with an average of 0.7 point, a slight increase compared to the 2.30 percent of the previous week, while the mark of 2.33 percent was reached a year ago. The all-time low on 15-year loans was 2.10 percent for the week ending August 5, 2021, according to records from 1991.
  • To the 5-year hybrid Treasury indexed floating rate mortgage (ARM) loan interest rates averaged 2.54 percent with an average 0.3 point value, down slightly from 2.55 percent last week and lower than 2.87 percent a year ago. Interest rates on 5-year ARM loans are still above the record low of 2.40 percent set in the week ended August 5, 2021.

Lenders who participated in Freddie Mac’s survey report average interest rates for borrowers with excellent credit who can forego a home by 20 percent. The results vary for different types of borrowers, with lower loans usually coming with higher interest rates.

As mortgage rates have risen in recent weeks, new purchase loan applications have decreased.

In a separate survey by the Mortgage Bankers Association, lenders found that demand for purchase loans this week was 5 percent lower than the previous week and 12 percent lower than the same period last year. Refinancing applications have also declined for four consecutive weeks, the report says.

Mortgage rates could rise to up to 4 percent by the end of 2022, predict the association’s economists in a September 21 report.

Historically, however, demand remains high and an environment of rising mortgage rates and limited inventory has continued to place the housing market in an exceptional position.

“Despite these opposing forces, we expect the real estate market to remain strong through the end of the year,” said Khater in Freddie Mac’s press release.

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