That’s how many more homebuyers locked in mortgage rates in March than in February, a sign of how quickly those rates are rising, new data shows.
Interest rates on new mortgages have jumped at unsettling speeds this year, most extremely since March, when the average for 30-year fixed loans rose by over 1 percentage point in just one month, according to lender data provided to The Balance. The volume of mortgage rate locks for home purchases hasn’t been higher in at least three years, jumping nearly 70% over the first three months of the year, including 31.5% in March alone, Black Knight, a mortgage data company, said Monday.
The data doesn’t necessarily mean people are rushing to buy houses, just that more prospective homebuyers are choosing to lock rates in, likely in anticipation they will only get worse. In fact, the overall volume of applications for purchases in the U.S. has been relatively low the past couple of months, according to data from the Mortgage Bankers Association. Not everyone who applies for a mortgage locks their rate in as part of the process, and people usually do so after an application is submitted and approved, according to Black Knight.
A rate lock—in which a lender guarantees a particular rate ahead of the closing on the home—protects prospective homebuyers if rates go up in the meantime. And the closing process can take months, an eternity in today’s fast-moving mortgage market.
The Federal Reserve raised its benchmark interest rate for the first time in years last month, contributing to a surge in yields on 10-year Treasuries, which heavily influence mortgage rates. The average rate offered for a 30-year fixed mortgage is now 5.87%, the highest in years and well above the 3.5% we started the year with, according to our lender data. In a startling sign of how quickly things can change, the average jumped so much one day last week that overnight, the same home would have cost $83 more a month to buy.
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