The average interest rate on 30-year fixed mortgages rose to 2.81 percent during the week ending 18 February, the highest rate in three months, according to the Freddie Mac financing agency.
In tandem that week, various measures of mortgage and refinancing activity dropped 11.6 and 11.3 percent respectively, the Mortgage Bankers Association (MBA) noted.
“Rates have turned faster than many people had anticipated,” MBA chief economist Michael Fratantoni told the Wall Street Journal.
Rising rates threaten to discourage potential buyers during spring and early summer when more than 40 percent of home sales occur, the National Association of Realtors said.
However, rates remain near historic lows, and more people are applying for mortgages now than at the same time a year ago, the WSJ reported.
In 2020, lenders issued a record $3.6 trillion worth of mortgages, more than a 50-percent increase from 2019’s level of business, the MBA said, with refinancing under lowered interest rates making up 59 percent of the volume.
With interest rates around 2.81 percent, between 16.7 and 18.1 million homeowners could qualify to lower their monthly payments by refinancing, according to data firm Black Knight.
TREND FORECAST: As high-priced urban cities continue to decline as more people work from home and move to suburban and ex-urban areas, the real estate market will continue to moderately grow… until interest rates rise and the equity markets crash.
For exurban areas where housing prices were moderately low, the price declines will be moderate during the “Greatest Depression” compared to higher-priced suburbs where prices sharply spiked during the COVID War.
