Home Buying

Long-term U.S. mortgage rates surge to 4.42%

Rising rates are making it particularly hard for first-time buyers to crack into the market. Continue reading at RealEstate.Boston.com.

At the beginning of the year, the monthly payment on a $300,000 loan at the 30-year average would have been $1,301. Now, that has climbed to $1,506. Adobe Stock

By Bloomberg

March 24, 2022

2 minutes to read

(Bloomberg) — Mortgage rates in the United States continued their rapid rise, reaching a level not seen in more than three years.

The average for a 30-year loan was 4.42%, up from 4.16% last week and the highest since January 2019, Freddie Mac said in a statement Thursday.

Borrowing costs tracked another increase in 10-year Treasury yields. The Federal Reserve lifted the benchmark interest rate by a quarter percentage point last week, with more hikes possible in the coming months. Russia’s invasion of Ukraine has roiled supply chains and financial markets, raising the stakes of the Fed’s fight to tame inflation.

“The rise in mortgage rates, combined with continued house price appreciation, is increasing monthly mortgage payments and quickly affecting home buyers’ ability to keep up with the market,” Sam Khater, Freddie Mac’s chief economist, said in the statement.

At the beginning of the year, the monthly payment on a $300,000 loan at the 30-year average would have been $1,301. Now, that has climbed to $1,506.

Home-loan costs are expected to climb more by the end of the year, though the global turmoil makes near-term moves hard to predict.

Buyers who jumped into the market earlier in the pandemic or owners who rushed to refinance were able to take advantage of record-low mortgage rates.

Over the past few months, many Americans have shelved purchasing plans or have given up altogether as inflation and escalating home prices decimate buying power. Still, demand for housing remains strong, with the real estate market starved of available properties to buy.

Rising rates are making it particularly hard for first-time buyers to crack into the market.

“Home buyers are in situations where they’re out shopping and they get figures two days prior, and then they go under contract and interest rates are a quarter of a percent higher,” said Brendan McKay, cofounder of McKay Mortgage Co., a brokerage that serves the D.C. area.

“It’s really tough for people to even know what their max buying power is, because it’s going to shift from one day to the next.”

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