(In general, mortgage rates are tied to the 10-year Treasury bond, which is affected by various factors, including the outlook for inflation.) Consumer price increases recently have reached levels not seen in 40 years, mainly because of lingering supply constraints from the pandemic.
Freddie mac interest rate forecast series#
Why are rates rising? In response to higher inflation and a strong employment market, the Federal Reserve is expected in March to begin a series of increases in its benchmark interest rate, indirectly helping to push up mortgage rates. (The association includes rates for refinances as well as purchases in its forecast.) The Mortgage Bankers Association forecasts average rates will be slightly above 4 percent by the end of the year - still low in historic terms, but higher than the 3 percent or lower that borrowers have been seeing. Freddie Mac’s weekly survey looks at loans used to buy homes, rather than at borrowers refinancing loans they already have. A year ago, the average rate was 2.81 percent. The average rate on a 30-year, fixed-rate mortgage this week rose to 3.92 percent, the highest rate since May 2019, according to the mortgage finance giant Freddie Mac. “Higher mortgage rates decrease affordability for anyone taking out a mortgage,” which the majority of home buyers do, she said.
“Prices will continue to grow, just at a slower pace,” she said, and one of the main reasons is that mortgage rates are expected to rise.
But prices are still expected to go up, and conditions will probably continue to favor sellers. The pace of housing price increases may slow from double- to single-digit percentages this year, said Danielle Hale, the chief economist for. Home prices remain high, and rising borrowing costs are adding to the challenge of buying a home heading into the traditional spring selling season.
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