Mortgage rates surged in January, hitting their highest point since the pandemic began. (iStock)
Mortgage rates surged last week to the highest point since the pandemic began, as the housing market awaits the Federal Reserve’s upcoming interest rate hike, according to the latest data from Freddie Mac.
The 30-year fixed-rate mortgage increased to 3.45% for the week ending Jan. 13th, Freddie Mac’s Primary Mortgage Market Survey showed. This is up from 3.22% the week prior and 2.79% last year, marking the highest point for the 30-year mortgage since March 2020.
"Mortgage rates rose across all mortgage loan types, with the 30-year fixed-rate mortgage increasing by almost a quarter of a percent from last week," Freddie Mac Chief Economist Sam Khater said. "This was driven by the prospect of a faster than expected tightening of monetary policy in response to continued inflation exacerbated by uncertainty in labor and supply chains."
If you want to refinance your mortgage before rates increase further, you can visit Credible to find your personalized rate without affecting your credit score.
HERE'S WHEN TO EXPECT THE FIRST INTEREST RATE HIKE OF 2022
Rising rates could soon slow homebuyer demand
Other loan types also saw a rate increase last week. The 15-year mortgage rose to 2.62%, up from 2.43% the week before and 2.23% last year, according to Freddie Mac. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) also increased to 2.57%, up from 2.41% the week before but still down from 3.12% last year.
Rising mortgage rates could soon cause prospective buyers to lose interest in buying a home, according to Khater. However, as of now, homebuying demand remains strong.
"The rise in mortgage rates so far this year has not yet affected purchase demand, but given the fast pace of home price growth, it will likely dampen demand in the near future," Khater said.
If you want to purchase a home or refinance your current loan amount to reduce your mortgage payments, visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
FED’S DECEMBER MEETING REVEALS POSSIBLE EARLIER, FASTER INTEREST RATE HIKES
Federal Reserve prepares to raise rates
Mortgage rates have been on the rise as the Federal Reserve prepares to raise rates in the first quarter of 2022. The Fed's decision to begin raising the federal funds rate is in an attempt to bring inflation — which rose to 7% in December, the highest level in nearly 40 years — back down to its targeted 2% range.
The Fed is now considering up to three rate hikes in 2022, which will affect interest rates for a variety of financial products including student loans, mortgages, personal loans, credit cards and more.
If you are interested in taking out a mortgage refinance before rates rise, contact Credible to speak to a home loan expert and get all of your questions answered.
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