The average 30-year fixed rate for a conforming loan rose 19 basis points to 3.52% last week, the Mortgage Bankers Association said Wednesday, the highest since March of 2020.
U.S. mortgage rates jumped to the highest levels in nearly two years last week, an industry lobby group said Wednesday, as lenders continue to adjust rates amid the Federal Reserve’s push to tackle the fastest inflation in four decades.
The Mortgage Bankers Association said 30-year fixed rates for conforming loan balances of less than $647,200 rose 19 basis point to 3.52% for the week ending January 7, the highest level since March of 2020.
The MBA’s seasonally-adjusted Purchase Index, which tracks mortgage applications for the purchase of a single-family home, rose 2.2% while its refinancing index edged 0.1% lower.
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“Rates at these levels are quickly closing the door on refinance opportunities for many borrowers. Although refinance activity changed little over the week, applications remained at their lowest level in over a month, and conventional refinance applications were at their lowest level since January 2020,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting.
“The MBA expects solid growth in purchase activity this year, as demographic drivers and the strong economy support housing demand,” he added. “However, the strength in growth will be dependent on housing inventory growing more rapidly to meet demand.”
Existing home sales rose 1.9% to a seasonally-adjusted rate of 6.46 million units in November, the most recently-available data.
Sale inventory, however, was down 13.3% from last year at 1.11 million units, helping push average prices 13.9% higher to $353,900.
A mix of higher lumber prices, supply-chain disruptions and Omicron-linked staff shortages are likely to keep sale inventories low in the coming months, while the Fed’s suggestion that at least three rate hikes will be needed this year to tame the fastest inflation in four decades will continue to push borrowing rates higher.
Still, despite these dynamics, the MBA’s Kan says total purchase activity this year in America’s red-hot housing market will hit a record $1.74 trillion
