Mortgage rates hit 4% for the first time in 3 years
On Wednesday, the Fed raised its benchmark rate by one-quarter of a percentage point, the first hike since 2018.
Mortgage rates topped 4% this week for the first time in nearly three years — and are expected to keep climbing.
The rate on 30-year fixed-rate mortgages averaged 4.16% for the week through March 17, the first time it exceeded 4% since May 2019, according to Freddie Mac. That was up from 3.85% a week earlier and 3.09% a year ago.
Rates have been ticking up thanks to a 40-year high in inflation, which the Federal Reserve is attempting to rein in by raising interest rates.
On Wednesday, the Fed raised its benchmark rate by one-quarter of a percentage point, the first hike since 2018, and it signaled that six more similarly sized increases were on the way.
Mortgage rates don’t move in lockstep with the Fed benchmark; they track the yield on 10-year Treasury bonds. That figure is influenced by a variety of factors, including the inflation rate, the Fed’s actions, and how investors react to them.
“The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “While home purchase demand has moderated, it remains competitive due to low existing inventory, suggesting high house price pressures will continue during the spring homebuying season.”
The average rate on 30-year fixed mortgages dropped as low as 2.65% in January 2021.
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