E Economics

US 30-Year mortgage rates rose for the 7th straight week

02 April, 2021



     

    US 30-year mortgage rates rose for the seventh straight week, climbing to the highest level in more than nine months. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 3.18 percent for the week ending April 1, 2021 and up from the previous week when it averaged 3.17 percent. A year ago at this time, the 30-year FRM averaged 3.33 percent.

     

    30-Year Fixed-Rate Mortgages April 2

     

    Over the same period, the report also showed the 15-year fixed-rate mortgage averaged 2.45 percent (unchanged from last week). A year ago at this time, the 15-year FRM averaged 2.82 percent.

     

    15-Year Fixed-Rate Mortgages April 2

     

    Concerns over the potential for higher inflation, a strong economic recovery and a massive federal government deficits have pushed Treasury yields and mortgage rates higher. While US 30-year mortgage rates remain low by historical standards, the spike threatens to crimp the ongoing housing rally.

     

    In the meantime, housing prices are overheating amid tight inventory, which is adding more pressure on affordability. As an example, the FHFA (Federal Housing Finance Agency) purchase-only price index rose 12.0 percent YoY in January (the largest increase on record and up from 11.4 YoY percent in December).

     

    U.S. housing prices (FHFA)

     

    In this context, Sam Khater, Freddie Mac’s Chief Economist, said “We even see that purchase demand is diminished today as compared to late May and early June of 2020, when mortgage rates were the same level. This is confirmation that while purchase demand remains strong, the marginal buyer is feeling the affordability squeeze resulting from the increases in mortgage rates and home prices we’ve experienced in recent months.

     

    Meanwhile, mortgage refinancing activity has been under pressure. Earlier this week, the index published by the Mortgage Bankers Association (MBA) fell seven out of the last eight weeks and reached the lowest level since May 2020.

     

    US-mortgage-refinancing