Mortgage rates increased again, rising to a level not seen since summer 2019. The 30-year fixed-rate averaged 3.92% in the week ending February 17, up from 3.69% the week before. It has not been this high since May 2019, when it was at 3.99%. rates jumped again because of high inflation and more robust than expected consumer spending, said Sam Khater, Freddie Mac’s chief economist. The economist also added that as the rates and house prices rise, affordability has become a substantial hurdle for potential homebuyers, especially as inflation threatens to strain consumer budgets.
The surge was followed by the recent rise in Treasury yields, which have moved higher due to inflationary pressures and market expectations of more aggressive policy moves by the Federal Reserve, said Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting. As rates rise, refinancing benefits fewer homeowners.
He said that the buyers still face elevated sales prices in addition to higher Mortgage rates. The mix of more conventional loans has pushed the average loan size to yet another record of $453,000. Rising home prices combined with limited inventory have created a one-two-punch for buyers, with fewer homes affordable to buyers based on their income level, said Danielle Hale, Realtor.com’s chief economist. That was the case even before Mortgage rate increases, which have upped the monthly cost of the typical $375,000 home listing by roughly $115 since December.