Mortgage rates posted another week of increases, continuing a long-predicted rise from their lowest points earlier this year.
The average rate for a 30-year, fixed-rate mortgage rose to 3.05 percent earlier this week, an increase of 6 basis points from the previous week, according to Freddie Mac’s weekly lender survey.
“As inflationary pressure builds due to the ongoing pandemic and tightening monetary policy, we expect rates to continue a modest upswing,” Freddie Mac Chief Economist Sam Khater said in a statement.
For the week ending Oct. 14, Freddie Mac’s weekly Primary Mortgage Market Survey reported average rates for the following types of loans:
- For 30-year fixed-rate mortgages, rates averaged 3.05 percent with an average 0.7 point, up from last week’s 2.99 percent figure and higher than its 2.81 percent mark from a year ago. Rates for 30-year loans hit an all-time low of 2.65 percent during the week ending Jan. 7, 2021, according to records dating to 1971.
- Rates on 15-year fixed-rate mortgages averaged 2.30 percent with an average 0.7 point, rising from last week’s 2.23 percent and lower than the rate of 2.35 percent a year ago. The mark moves the rate for these 15-year loans further from their all-time low of 2.10 percent set the week ending Aug. 5, 2021, according to records dating to 1991.
- For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.55 percent with an average 0.2 point, up slightly from 2.52 percent last week and down from 2.90 percent a year ago. Rates on 5-year ARM loans are still hovering above the record-low 2.40 percent rate set during the week ending Aug. 5, 2021.
The averages reported in Freddie Mac’s survey reflect loans for borrowers who have excellent credit and put 20 percent down on a home. Borrowers with worse credit can expect to qualify for higher interest rates.
Even with higher rates, borrowers appeared to be more willing to apply for loans. A separate weekly survey from the Mortgage Bankers Association found there was a 2 percent rise in purchase loan applications last week compared with the week before, after accounting for seasonal factors.
Still, the number of purchase loan applications remained down 10 percent year over year, a reflection of the high points they had reached during the first year of the pandemic.
“Historically speaking, rates are still low, but many potential homebuyers are staying on the sidelines due to high home price growth,” Khater said in the release. “Rising mortgage rates combined with growing home prices make affordability more challenging for potential homebuyers.”
Those rates are expected to continue to rise in the weeks to come, Khater said. This rate movement could place some downward pressure on home prices if they continue.