Mortgage rates inched even higher late last week, hitting a level not seen in four years after the January unemployment report topped economists’ expectations. As of Friday, CNBC reported that the 30-year fixed-rate mortgage rate was at 4.5% on average. Rates at some lenders were even higher than that as expectations increased that the Federal Reserve will raise interest rates multiple times this year. With wages also showing an uptick in January, there was a jump in bond yields, to which mortgage rates are tied.
The continuing rise in mortgage rates, coupled with concerns that home prices are on the increase, has led some to worry that buyers will be shut out of the housing market this spring. Even a small increase in mortgage rates can preclude certain borrowers from getting a mortgage and thus purchasing a home. CNBC noted that home prices at the lower end of the market are seeing the fastest jump. These homes are usually for first-time buyers who are extremely sensitive to changes in mortgage rates. This all comes while mortgage rates are still at historic lows – it’s just that home buyers have gotten used to the low rates.
It is likely mortgage rates will rise in the year ahead, says Len Kiefer, deputy chief economist at Freddie Mac.
“The Federal Reserve did not hike rates this week, but the market views future hikes as a near certainty,” Kiefer says.
“The expectation of future Fed rate hikes and increased borrowing by the U.S. Treasury is putting upward pressure on interest rates. The 30-year fixed rate mortgage is up over a quarter of a percentage point (27 basis points) from the first week of the year. Thirty-year fixed mortgage rates have increased for four consecutive weeks and are now slightly above where they were last year at this time.”
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Psst.I’m a real estate agent.This post was authored by local resident and REALTOR, John Womeldorf. John is known around town as Mr. Williamsburg, for both his extensive knowledge of the Williamsburg/ Richmond/Hampton Roads area and his expertise in the local real estate market.John can help you access all the information you will need about choosing a neighborhood/ buying a home in New Kent, Gloucester, Newport News, Hampton, York County, Smithfield, Williamsburg, Poquoson, Richmond or the greater Hampton Roads area, including area information on schools, local government, shopping, activities for the children and more!
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