Mortgage Rates Jump the 3% Threshold

David Deem

Mortgage rates peeked over the 3% threshold for the 30-year fixed-rate mortgage (FRM), marking 3.01% for the week ending Sept. 30.

According to Freddie Mac's Primary Mortgage Market Survey®, this is up from last week's 2.88%.
Mortgage details:
30-year fixed-rate mortgage averaged 3.01% with an average 0.7 point for the week ending Sept. 30, 2021, up from last week's 2.88%. Last year, the 30-year FRM averaged 2.88%.
15-year fixed-rate mortgage averaged 2.28%with an average 0.6 point, up from last week's 2.15%. Last year, the 15-year FRM averaged 2.36%.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.48% with an average 0.3 point, up from last week's 2.43%. Last year, the 5-year ARM averaged 2.90%.
The takeaway:
This marks the end of a seven-week streak of either remaining flat or moving slightly. The biggest week-over-week increase since February, the 30-year loan increased 13 basis points—the first time since June that Freddie Mac-reported mortgage interest rates reached above 3%.
"Mortgage rates rose across all loan types this week as the 10-year U.S. Treasury yield reached its highest point since June," said Sam Khater, Freddie Mac's chief economist, in a statement. "Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation and emerging energy supply shortages which compound other labor and materials shortages."
Khater continued, "We expect mortgage rates to continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year."
"The 10-year Treasury yield also rose out of its sideways trend dating back to mid-August and above 1.5% for the first time since late June. These increases were caused by the recognition that the economy is doing well and that growth will likely continue," said® Chief Economist Danielle Hale in a statement. "This sentiment was boosted by the Fed's statement last week that the economy had made enough progress toward economic goals that tapering of asset purchases may be warranted soon. While uncertainty over a variety of legislative priorities—from infrastructure plans to the debt limit—increase the potential for surprises and volatility in rates, the likely near-term trend is for rates to move higher."

"Early fall is usually the best time of year for buyers to purchase a home, and with September housing inventory hitting 2021 highs, this season holds that typical promise. Home shoppers will want to think about rising rates when setting a budget. Smart buyers should consider calculating a monthly payment not only at today's rates, but also at rates that are a bit higher so that they won't be derailed by a sudden upward move," said Hale. "Additionally, home shoppers want to carefully consider their must-haves versus nice-to-haves since both rising home prices and higher rates mean higher monthly payments. At today's rate, the monthly mortgage payment on a median-priced home for-sale is roughly $150 higher than it was a year ago with $25 of the increase owed to higher rates and $125 owed to higher home prices."




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