Inflation and stricter policies continue to put upward pressure on interest rates
US mortgage rates moved up for the third week in a row, with the 30-year fixed-rate mortgage closing the week at 3.14%.
The 30-year mortgage rate increased from 3.09% last week to 3.14% for the week ending October 28, according to Freddie Mac’s latest Primary Mortgage Market Survey. At this time a year ago, it averaged 2.81%.
The 15-year fixed-rate mortgage (FRM) posted a four-basis-point uptick from the previous week to 2.37%, while the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) increased two basis points to 2.56%. Last year, the 15-year FRM averaged 2.32%, and the five-year ARM was 2.88%.
“The yield on the 10-year Treasury note has been trending up due to the decline in new COVID cases, increasing consumer optimism, as well as broadening inflation and persistent shortages,” said Freddie Mac chief economist Sam Khater. “Mortgage rates are also rising, but purchase demand remains firm, showing that latent purchase demand exists among consumers.”
Holden Lewis, home and mortgage specialist at NerdWallet, added: “Inflation, accompanying a stubbornly recovering economy, is pressing upward on mortgage rates. The remedy — stricter monetary policy — will cause mortgage rates to rise, too.”
Higher rates continue to reduce borrowers’ incentive to refinance, according to the Mortgage Bankers Association. While the total mortgage application volume edged up three basis points last week, refinance applications were down 2% week over week and 26% year over year.
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