Mortgage rates are now back to levels we saw back in April of 2020.
The average rate on the popular 30-year fixed mortgage hit 3.7% Tuesday morning, according to Mortgage News Daily. That is the highest since early April 2020 and now 83 basis points higher than the same time one year ago.
Rates are reacting to surging bond yields, as financial markets react to swifter and more aggressive monetary policy tightening by the Federal Reserve. Mortgage rates loosely follow the yield on the 10-year U.S. Treasury, but they are also affected by demand for mortgage-backed bonds. The Fed had been buying those bonds aggressively during the pandemic in order to keep rates low, but it is now pulling out of the MBS market faster than expected.
Lenders are losing refinance business, which had been booming just a year ago when rates were much lower. Applications to refinance a home loan were down 50% from a year ago, according to the most recent weekly survey from the Mortgage Bankers Association.
As rates increase even modestly, they impact your monthly mortgage payment and overall affordability. If you’re looking to buy a home, rising mortgage rates should be an incentive to act sooner rather than later.
The good news is, even though rates are climbing, they’re still worth taking advantage of. Historical data shows that today’s rate, even at 3.7%, is still well below the average for each of the last five decades.
2010: Average rate was 4.09%
2000: Average rate was 6.27%
1990: Average rate was 8.12%
This data shows that even though we are not seeing the 2.5% rates like we did in 2021, today’s rates are still historically low and it’s still a good time to lock in.
If you are pre-approved, please be sure to check with us to see if you can still afford the new rates on your mortgage. We can run numbers for you quickly to help you understand the market today. There is no end in sight for rates to go back down. Experts are pointing towards an increase in rates all year. Act now.
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