Average long-term US mortgage rates jump; 30 years now 3.45%

SILVER SPRING, Md. (AP) — Average long-term U.S. mortgage rates jumped again last week, hitting their highest level since March 2020, just as the coronavirus pandemic erupted in the U.S.

Mortgage buyer Freddie Mac reported on Thursday that the average rate on the benchmark 30-year home loan rose to 3.45% this week from 3.22% last week. It was 3.5% at the end of March 2020, when the pandemic was just beginning. A year ago, the 30-year rate was 2.79%.

The average rate on 15-year fixed-rate mortgages, popular among those refinancing their homes, rose to 2.62% from 2.43% last week.

“This was driven by the prospect of faster than expected monetary policy tightening in response to continued inflation exacerbated by uncertainty in labor and supply chains,” said Sam Khater, chief economist at Freddie Mac. “The rise in mortgage rates so far this year has yet to affect buying demand, but given the rapid pace of house price growth, it will likely dampen demand in the near future.”

Available homes have been scarce since well before the pandemic began, and prices have risen nearly 20% in the past year. Higher mortgage rates could make it even harder for homebuyers to secure a new home.

Mortgage rates are set to rise this year after the Federal Reserve announced last month that it would start scaling back its monthly bond purchases – which are aimed at lowering long-term rates – to slow the acceleration of inflation. . But even with the three or four rate hikes expected in 2022, the Fed’s benchmark rate would remain historically low at around 1%.

On Wednesday, the government announced that inflation had reached 7% in December from a year earlier, the biggest such increase in four decades. Earlier Thursday, the Labor Department reported that prices at the wholesale level rose a record 9.7% in December from a year earlier.

In addition to soaring inflation, experts expect robust economic growth and a tight labor market to continue pushing rates higher.

Although U.S. jobless claims rose by 23,000 last week to 230,000, they are still low by historical standards and the highly contagious omicron variant does not yet appear to have triggered any layoffs.

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