Mortgage interest rates have reached their highest level since 2015, causing some concern that rising rates could slow housing activity.
The average 30-year fixed rate mortgage topped 4% in the latest Primary Mortgage Market Survey by Freddie Mac for the week of Nov. 23.
“In a short week leading up to the Thanksgiving holiday, the 10-year Treasury yield rose 8 basis points,” Freddie Mae Chief Economist Sean Becketti said in a Nov. 23 news release.”The 30-year mortgage rate followed suit, rising 9 basis points to 4.03%. This increase marks the first week since 2015 that mortgage rates have risen above 4%.”
The increase in mortgage rates marks an upward trend since the November presidential election, which have risen nearly 50 basis points over the past three weeks. The 30-year fixed rate mortgage averaged 3.54% the week immediately prior to the election.
“If rates stick at these levels, expect a final burst of home sales and refinances as fence-sitters try to beat further increases, then a marked slowdown in housing activity,” Becketti said in a Nov. 17 news release by Freddie Mac.
So far, the impact of the rising rates has been mixed. In its mortgage application survey for the week ending Nov. 18, the Mortgage Bankers Association reported mortgage applications increased 5.5% compared with the previous week, while refinancing activity declined.
“Mortgage rates have continued to move higher in the post-election period, as investors worldwide are looking for increases in growth and inflation,” Michael Fratantoni, chief economist and senior vice president of Research and Technology for the MBA, said in a Nov. 23 release. “Refinance volume dropped further over the week, particularly for refinances of FHA and VA loans. Purchase volume increased sharply for the week compared to both last week, which included the Veteran’s Day holiday, and last year, with purchase volume up more than 11% on a year-over-year basis.”