Mortgage charges on the rise once more
The average rate on a 30-year fixed-rate mortgage rose to 3.05% in the week of October 14, the highest rate since April, according to Freddie Mac. The 15-year fixed-rate mortgage rose to 2.3%.
After falling steadily in the first year of the pandemic, interest rates hit a record low of 2.65% in early 2021 on 30-year mortgages. They rose in the spring to 3.18% in April, then fell again and leveled off at just under 3% for most of the summer.
Interest rates are now expected to start rising again, said Sam Khater, Freddie Mac’s chief economist, as inflationary pressures mount from the ongoing pandemic and tightening of monetary policy.
“Many potential homebuyers remain on the sidelines because of the high growth in property prices,” said Khater. “Rising mortgage rates combined with rising home prices make affordability more difficult for potential homebuyers.”
Refinancing is becoming less attractive to homeowners as interest rates rise, with the percentage of refinancing falling last week, according to a weekly survey by the Mortgage Bankers Association.
“We continue to expect refinancing activity to slow as interest rates rise and borrowers see fewer interest rate incentives,” said Joel Kan, associate vice president of economic and industry forecasting at MBA.
However, according to the MBA, sales requests rose, suggesting homebuyers are moving on.
Financing costs remain cheap for most home buyers and provide a strong incentive for first-time buyers to keep searching, said George Ratiu, manager of economic research at Realtor.com.
“In mid-October, the number of homes for sale improved compared to the overheated first half of this year, resulting in slower price growth,” he said. “It seems that buyers and sellers are finally taking a step back from last year’s pandemic rush to regain a foothold and reconsider their next steps.”