Mortgage rates continued to rise during the week ended March 1, with the average rate for a 30-year fixed-rate mortgage rising to 4.43%, up from 4.4% the previous week, according to Freddie Mac’s Primary Mortgage Market Survey.
A year ago at this time, the 30-year FRM averaged 4.1%.
It was the eighth consecutive week that the average rate for a 30-year increased on a week-over-week basis.
The average rate for a 15-year FRM was 3.9%, up from 3.85%. A year ago at this time, the 15-year FRM averaged 3.32%.
The average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) was 3.62%, down slightly from last week, when it averaged 3.65%. A year ago at this time, the five-year ARM averaged 3.14%.
“Optimistic testimony on Capitol Hill from Federal Reserve Chairman Jerome Powell sent Treasury yields higher as Powell stated his outlook for the economy has strengthened since December,” says Len Kiefer, deputy chief economist for Freddie Mac, in a statement.
“Following Treasurys, the 30-year fixed mortgage rate jumped 3 basis points to reach 4.43 percent in this week’s survey. The 30-year rate has been on a tear in 2018, climbing 48 basis points since the start of the year and increasing for 8 consecutive weeks.”
Rising mortgage rates appear to be taking a bite out of new and existing-home sales – however, there are other market factors, such as a lack of inventory, that are also holding home sales back.
Existing-home sales in January fell 3.2% compared with December, and pending home sales fell 4.7% to reach the lowest level in more than three years, according to the National Association of Realtors (NAR).
In addition, new home sales fell 7.8%, according to estimates from the U.S. Census Bureau and the Department of Housing and Urban Development.
However, the exact degree to which rising rates are impacting home sales is still difficult to discern, due to offsetting factors such as pent-up demand due to lack of inventory, increasing strength in the labor market, a new tax code and rising wages.
“As we documented, historically when mortgage rates surge, housing swoons,” Kiefer says. “But we think strength in the economy and pent up housing demand should allow U.S. housing markets to post modest growth this year even with higher mortgage rates.
“We really have to wait for housing markets to heat up in spring, but early indications are that housing demand remains robust to these rate increases,” he adds. “The Mortgage Bankers Association reported in its latest weekly applications survey that home purchase mortgage originations were up three percent from a year ago.”