Mortgage Rates Reach 4-Year High
Mar 8th, 2018 @ 11:45 AM by Amber Nelson
The average rate on a 30-year fixed-rate mortgage (FRM) increased to 4.46% with an average 0.5 point for the week ended March 8, 2018, up from 4.43% a week ago. It is also up from one year ago when the average was just 4.21% and it is the highest level since the week of January 9, 2014 when the average rate was 4.51%.
Rates on other types of home loans also rose in the latest week. The average on a 15-year FRM grew to 3.94% with an average 0.5 point, up from 3.90% and 3.42% the previous year. That marks an almost 7-year high – the last time the 15-year FRM reached that high was the week of April 28, 2011 when it averaged 3.97%. The average rate on a 5-year Treasury-indexed hybrid adjustable rate mortgage (ARM) increased to 3.63% with an average 0.4 point, up slightly from 3.62% the week before and up from 3.23% a year earlier.
The upward trend in rates has been driven by Treasury yields. “The 10-year Treasury yield has been bouncing around in a narrow 15 basis point range for the last month,” explained Freddie Mac Deputy Chief Economist Len Kiefer. “While the yield on the 10-year Treasury is currently below the high of 2.95 percent reached two weeks ago, mortgage rates are up for the ninth consecutive week.”
The change in Treasury yields was due to more positive economic feedback. “Rates inched higher overall last week driven by market concerns over potential U.S. trade tariffs, and Fed Chairman [Jerome] Powell’s testimony outlining stronger economic growth and higher expected inflation in the near future,” commented Mortgage Bankers Association Economist Joel Kan.
Higher interest rates may make it even more difficult for first-time homebuyers to break into the already tight market. Home prices have risen 6.6% in the past year according to property data firm CoreLogic. “Entry-level homes have been in particularly short supply, leading to more rapid home-price growth compared with more expensive homes,” said CoreLogic Chief Economist Frank Nothaft. As rates climb, these borrowers will continue to be priced out of the market until prices level out.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.