Mortgage Rates Rise more than 0.5%; at the Highest Levels in 2 Years Now
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Fed’s announcement last week sent the mortgage rates soaring to the highest levels in 2 years. Fed now sees itself hiking rates and reducing bond purchases faster than what the market anticipated earlier pushing the treasury yields and taking the mortgage rates along with it.
According to Freddie Mac’s latest Primary Mortgage Market Survey, 30 Year Fixed mortgage rates now average 3.55% with 0.7% of the loan amount as fees/points. See the screenshot below:
As a reference point, on the November 10th Primary Mortgage Market Survey, Freddie Mac Reported 30 Year Fixed average rate of 2.98% and an average 15 Year Fixed rate of 2.27%.
That’s a jump of more than 0.5% in rate in less than 12 weeks.
While most experts and agencies had predicted a rise in mortgage rates in 2022, some expected it will not be until the end of the year that we will see a 3.5% 30 years Fixed mortgage rate. We are not even in February yet and have already crossed that number.
These are definitely ominous signs for rates in 2022.
Note this is for primary residence mortgage for conforming limit loans. If you’re financing a 2nd (vacation) home, Investment (rental) property, or trying to get a high-balance loan (Loan amounts higher than $647,200) or a loan with a cash-out, your rate in some cases can be higher than 4% depending on the fees and points you’re willing to pay.
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Unsurprisingly, the refinance applications plunged to a 2-year low as the rates surged. According to The Mortgage Bankers Association (MBA), Refinance Index decreased 13% from the previous week and was 53% lower than the same week one year ago. The refinance share of mortgage activity declined to 55.8% of total applications, the lowest for refinancing since December 2019.
Outlook for Mortgage Rates
Other than the unlikely event of Russia attacking Ukraine or some other unforeseen geopolitical event, there are almost no indicators right now that show there could be a possible lowering of mortgage rates.
However, the rate of the spike may slow down which means the average 30-year fixed for borrowers with good credit and down payment may not touch 4% for a primary residence in a hurry.
It is however obvious that whether you are looking to refinance or buy a home, getting a mortgage sooner than later may be in your best interest (no pun intended).
