30-year mortgage rates jump to 3.17%, their highest since June – Orange County Register
This year’s surge in mortgage rates reached its highest level since June reduced the amount home hunters can borrow and could slow the recovery in home buying.
Mortgage buyer Freddie Mac said the March 25 average rate on the 30-year fixed-rate home loan rose to 3.17% from 3.09% the week before, the highest since June .
At that rate, a house payment of $ 2,500 per month earns a borrower $ 580,278 on a 30-year loan. Compared to the all-time low of 2.65% set on January 7, that’s $ 40,125 less in just 11 weeks, a loss of purchasing power of 6.5%.
But rates are still low – a year back: That week’s 3.5% rate got the same borrower just a mortgage of $ 556,737. Thus, over 12 months, there is still an increase of $ 23,541 (or 4.2%) in purchasing power.
PS: The March 25 average rate on 15-year fixed rate loans, popular among those looking to refinance their mortgages, rose to 2.45% from 2.40% last week. It was 2.92% a year ago.
Economists had expected modest increases in mortgage rates this year, although they will likely remain low as the Federal Reserve keeps interest rates close to zero until the economy recovers from the crisis. coronavirus pandemic. Record lending rates have pushed buyers into the housing market, which has been one of the strengths of the US economy. But a shortage in the supply of housing remains a problem and has pushed prices up.
Rising rates threaten to cripple a real estate rally that has been built on cheaper mortgages.
“Since January, mortgage rates have risen, leaving potential buyers with less purchasing power,” said Sam Khater, chief economist at Freddie Mac. “Unfortunately, this has disproportionately affected the lower end of the market, where supply is the lowest.”
The mortgage industry was also boosted by the pandemic rate cut, posting record profits as a flood of Americans refinanced their debts and applied for loans to buy homes.
In 2021, rates followed a surge in 10-year Treasury bond yields, which last week hit their highest levels since January 2020 – before the pandemic began to rock global financial markets.
Also on Thursday, the government reported that the number of people claiming unemployment benefits fell sharply last week to 684,000, the lowest number since the pandemic began a year ago and a sign that the economy is improving. This is the first time that weekly jobless claims have fallen below 700,000 since mid-March last year.
The Associated Press, Bloomberg News, and Jonathan Lansner of the Southern California News Group contributed to this report.