Mortgage Rates Surge, Topping 3% for First Time Since June
U.S. Mortgage Rates Surge, Topping 3% for First Time Since June
(Bloomberg) -- Mortgage rates in the U.S. jumped above 3% for the first time in three months.
The average for a 30-year loan was 3.01%, up from 2.88% last week and the highest since June 24, Freddie Mac said in a statement Thursday.
Historically low borrowing costs have helped fuel the pandemic housing rally, with a shortage of available homes pushing prices higher as Americans seek larger properties in the suburbs.
If rates continue to tick up, that could help moderate surging prices, according to Sam Khater, chief economist at Freddie Mac.
“We expect mortgage rates to continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year,” Khater said.
Many potential buyers have struggled to find homes they can afford, or lost bidding wars in a market where cash offers have dominated. That’s fueled mounting concerns about affordability, especially for renters looking to become homeowners.
The 30-year average sunk in 2020 and reached a record low of 2.65% at the beginning of this year. It has climbed since then, tracking yields for 10-year Treasuries, which have been above 1% since January.
The 10-year yield rose above 1.5% this week for the first time since June.
With the economy bouncing back from the pandemic, Federal Reserve Chair Jerome Powell said last week the U.S. central bank could begin scaling back asset purchases in November. That came after officials revealed a growing inclination to raise interest rates next year.
“The biggest risk to mortgage rates right now is inflation,” said Greg McBride, chief financial analyst at Bankrate.com. “Nobody really knows what the path is.”
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