Mortgage rates in the U.S. jumped to the highest level since January 2020, before the pandemic rocked financial markets.
The average for a 30-year loan was 3.69%, up from 3.55% last week, Freddie Mac said in a statement Thursday. That was the highest since Jan. 2, 2020, when rates averaged 3.72%.
Borrowing costs resumed their upward climb after holding relatively steady for about a month. They tracked a surge in yields for 10-year Treasuries, which are approaching 2%. Stubbornly high inflation and an unexpectedly strong jobs report for January are likely to clear the way for the Federal Reserve to lift interest rates, which may make mortgages more expensive.
“The normalization of the economy continues as mortgage rates jumped to the highest level since the emergence of the pandemic,” Sam Khater, Freddie Mac’s chief economist, said in the statement. “Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on homebuyer demand.”
On the other hand, rising rates may have the effect of spurring buyers to jump into the market before costs get even higher. With home prices climbing and inventory at record lows, the challenge will be finding anything affordable.
At the current average for a 30-year low, the monthly payment on a $300,000 mortgage would be $1,379. That’s up from $1,209 a little more than a year ago, when rates hit a record low of 2.65%.
This article was provided by Bloomberg News.