Mortgage rates for the first time since 2019 are up to 4%

The era of ultralo mortgage rates is over.

The average rate for a 30-year fixed mortgage rose to 4% for the first time since May 2019.

Freddie Mac

Said Thursday. At the beginning of the year, the average interest rate on the most popular home loan in the United States was 3.22%. It touched a very low level of 2.65% in January 2021 and spent less than 3% for half a year.

Home loan costs were rising earlier Federal Reserve decision Wednesday is set to raise rates for the first time since 2018. And the Fed’s quarter-point move did not affect Freddie Mac’s weekly average of 4.16%, which was recorded before the Fed’s announcement. Send more fees. Mortgage rates are closely linked to US Treasury yields for 10 years, rising in line with the central bank’s key rate.

Rising debt costs are another challenge for homeowners who are already facing Rising housing prices. The average rate of 4%, though historically lower, is higher than the sub-3% rate obtained for most of last year. Last time the 30-year mortgage rate was 4%, the average home price was $ 277,000 — 26% lower than today.

According to Realtor.com data, when rates were the lowest in December 2020, the monthly fee for a $ 375,000 home with a 4% interest rate was $ 220 higher. With a 20% down payment, it adds $ 79,200 to a 30-year mortgage.

News Corp.,

The owner of the Wall Street Journal operates Realtor.com under the license of the National Real Estate Association.

Higher prices have begun to reduce the demand for mortgages used to buy homes. Applications for purchasing mortgages in February were down 3.9% compared to the same month last year, according to the Mortgage Bankers Association.

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But economists say demand is lower than expected because inventory is low. At the current pace of sales, according to the National Association of Real Estates, homes were at a 1.6-month low in the market in January.

“There are still many who can absorb these high rates, some generation wealth or equity holders from previous transactions,” said Selma Hep, CoreLogic’s deputy chief economist.

U.S. housing prices hit an all-time high in 2021, but those increases are expected to slow in 2022 due to a number of economic factors. Here’s what it means to run a home market and to prospective buyers and sellers. Photo: George Frey / Bloomberg News

Rising rates will make it harder for homeowners to save money through refinancing. According to the mortgage-data company, the number of borrowers who can reduce their monthly payments through refinancing fell from 4 million in February to 18 million in February 2021.

Black Knight Inc.

A steep decline in refinancing is expected to reduce total single-family mortgage sources by almost 38% in the first quarter compared to the same period last year.

Fannie May

Said.

Write to Orla McCaffrey at [email protected]

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