Buyers Haven’t Seen Mortgage Rates This High Since 2020

Number of the Day: The most relevant or interesting figure in personal finance

3.60%

That’s the average 30-year mortgage rate being offered by U.S. lenders—the highest interest rate since 2020, according to daily data provided to The Balance.

The most popular type of home loan is more expensive now than it has been in over a year, in large part because of inflation and the omicron variant of COVID-19. Fixed mortgage rates tend to move in the same direction as 10-year Treasury yields, which usually rise when investor concerns about inflation increase. This week yields have surged to their highest in months as worries about the recent spike in COVID-19 cases fuel fears that inflation will get worse and in turn push the Federal Reserve to raise benchmark interest rates higher and faster than originally planned.

While the average 30-year offer rate is still not that much higher than the 2.89% low point reached in December 2020, the days of record low rates are slipping farther into the rearview mirror, leaving prospective homebuyers with less ability to offset the soaring home prices seen in the pandemic. 

(The Balance’s daily mortgage data goes back only to April 2021, and data on yearly highs and lows only as far back as 2020, but we do know the highest the 30-year average got in 2020 was 4.71% in March. We also know separate measures from Freddie Mac and the Mortgage Bankers Association show the average 30-year rate hit an all-time record low in the first winter of the pandemic.)

“The financial comfort zone continues shrinking as home prices keep soaring and mortgage rates tick upward,” said Todd Teta, chief product officer with real estate data company ATTOM Data Solutions, in a report on home affordability released last week. 

Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.

Article Sources