U.S. mortgage rates jumped again this week, according to Freddie Mac’s Primary Mortgage Market Survey of April 1st. The 30-year fixed-rate mortgage rose to 3.29% from 3.21% last week and 4.07% a year ago; the 15-year fixed rate moved up to 2.61% from 2.57% and 3.26%, respectively; and the 5-year ARM rate averaged 2.77%.
The U.S. economic recovery has been fueled by record-low mortgage rates and stimulus checks from the government to help support households during the pandemic. This led to a strong housing market with a balance of supply and demand, said Sam Khater, Chief Economist at Freddie Mac, in a statement accompanying this week’s survey results.
“Mortgage rates are now at the highest level since June 2020,” he added. “While the rise in rates will likely put some pressure on home sales going forward, we expect existing sales to remain close to 20-year highs.”
However, as rates continue to rise and new stimulus checks remain uncertain, economists expect the pace of home sales to slow down in 2021, as buyers are no longer able to afford as much house as they could before.
“The current Fed and Treasury policies have been effective (up until now) in driving down mortgage interest rates and stimulating credit demand by both consumers and businesses alike,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
“That said, policy makers are clearly concerned about rising inflationary pressures which could potentially derail an already fragile recovery given the enormous amount of federal support currently in place.”
According to Freddie Mac’s report, “With vaccinations ramping up and fears of COVID-19 receding, more consumers are out shopping for homes, which is pushing prices higher while putting pressure on affordability.
In addition, the supply of homes remains tight as many homeowners who would be selling their homes are opting to stay put due to low inventory.”
Moe Bedard is the founder and lead mortgage analyst for LoanSafe.org. Since 2007, LoanSafe has helped over 2 million consumers with solutions to their mortgage problems and has been featured in the New York Times, LA Times, Fox Business, and many other media publications.