Mortgage rates continued to rise amid fears of inflation and geopolitical uncertainty. The 30-year fixed-rate mortgage averaged 4.42% in the week ending March 24, up from 4.16% the week before, according to Freddie Mac.
The 30-year fixed-rate mortgage increased by more than a quarter of a percentage point as mortgage rates across all loan types continued to move up, said Sam Khater, Freddie Mac’s chief economist.
“Rising inflation, escalating geopolitical uncertainty and the Federal Reserve’s actions are driving rates higher and weakening consumers’ purchasing power,” said Khater. “In short, the rise in mortgage rates, combined with continued house price appreciation, is increasing monthly mortgage payments and quickly affecting homebuyers’ ability to keep up with the market.”
Rates rose as investors reacted to comments made by Federal Reserve Chairman Jerome Powell on Monday that inflation is “much too high,” and the Fed might exercise the option of larger 50 basis point increases in the funds rate in upcoming meetings, said George Ratiu, Realtor.com’s manager of economic research.
“The main takeaway is that mortgage rates are likely to push toward 5.0% before the end of the year, with lenders anecdotally reporting quotes around 4.75% for the 30-year fixed rate,” Ratiu said.
That means the window for record breaking low mortgages has closed, he said, and a return toward mortgage rates that are more typical of what we have seen the past two decades. At today’s rate, the buyer of a median-priced home is spending more than $300 per month more on their monthly payment than they did a year ago, Ratiu said.
“For buyers and sellers, this spring will offer a period of transition, in which high prices will combine with rising interest rates to challenge budgets already contending with high inflation,” Ratiu said.