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Fixed mortgage rates for 30 years are above 3% for the first time since July

Interest rates have risen since January, although one economist expects further increases to be “subdued” in the coming months.

After months of wildly low mortgage rates that led to a surge in refinancing rates, Freddie Mac announced on Thursday that the average rate on a 30-year fixed-rate loan had risen above 3 percent for the first time since July.

Freddie Mac’s announcement was based on a market survey and found that the average rate is now 3.02 percent. While this still seems good for people who have worked in the housing world for decades – the rate was over 18 percent in the early 1980s – this means an increase compared to the last few months. In particular, rates fell below 3 percent last spring when the coronavirus pandemic broke out and have stayed in the same neighborhood since then.

The survey shows that the average interest rate on a 30-year fixed-rate mortgage bottomed out at around 2.65 percent in January. They have climbed since then, although this is the first time they have exceeded the 3 percent threshold this year.

Photo credit: Freddie Mac

The survey also shows that the interest rate on a 15-year fixed-rate mortgage this week averaged 2.34 percent. The interest rates on a 5-year hybrid floating rate mortgage with Treasury index, also known as ARM, averaged 2.73 percent.

Low interest rates in recent months have spurred lending rates on. A total of 3.51 million residential mortgages were taken out in the fourth quarter of 2020.

In a statement on the new findings and higher rates, Freddie Mac economist Sam Khater said the rising rates “have had an impact on buying demand.” Even so, Khater was generally optimistic about the near future.

“While buying activity remains high, it has cooled in recent weeks and is currently at the pre-pandemic level in early March,” he said. “However, the rise in mortgage rates over the next few months is likely to be more subdued than it has been in recent weeks, and we expect a strong spring sales season.”

While soaring interest rates are likely to be unwanted news for homeowners looking to refinance, many in the industry have predicted this outcome. This is partly due to the fact that the yield on the 10-year Treasury bill has generally risen since last summer. Mortgage rates tend to follow rates of return, which themselves tend to rise as investors become more confident in the economy.

And despite the slight spike in interest rates, there’s no evidence that the broader real estate market is anything but hot right now. Thanks to low inventory levels in many locations, agents across the Inman country have announced in the past few days that prices in their markets have continued to rise, demand remains strong and they are still seeing multiple offers on real estate.

Email Jim Dalrymple II

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