MORTGAGE RATES CLIMB TO HIGHEST SINCE 2011

The U.S. average interest rate on a fixed-rate, 30-year mortgage reached 4.67 percent last week, the highest rate since December 2018, the Federal Home Loan Mortgage Corporation reported.
The rate stood at 3.22 percent at the beginning of this year and now is closing in on 5 percent, a rate not seen since 2017.
Higher rates had been widely expected as the U.S. Federal Reserve began signaling rate increases last year and likely will continue to rise; the Fed is poised to raise rates several more times this year, as we have reported in “Fed Raises Rate, Signals More to Come” (22 Mar 2022) and other articles.
However, rates have climbed higher faster than most analysts expected, according to The Wall Street Journal.
Typically, higher rates slow housing sales, but analysts and brokers think that might not be so now.
The number of mortgage applications for home purchases has risen in three of the four most recent weeks, according to the Mortgage Bankers Association (MBA).
The inventory of homes for sale is about a 1.6-month supply, a record low, the National Association of Realtors reported.
“It’s going to take a pretty healthy increase in rates to moderate demand” for houses, president Phil Shoemaker of mortgage lender Homepoint Financial Corp. told the WSJ.
However, loans to refinance mortgages will make up only 33 percent of applications this year, compared to 59 percent in 2021, the MBA said.
One year ago today mortgage rates were at 3.38 percent. Today, Mortgage News Daily reported that the average rate on the 30-year fixed mortgage hit 5.02 percent.  
With the exception of two days in 2018, not since 2011 have rates crossed that threshold since 2011, save two days in 2018. 
TREND FORECAST: As interest rates rise, home prices stay high, and the U.S. and world economies weaken, more recent home buyers will find they owe more on their overpriced homes than they are now worth.
Unlike the 2007 housing bubble that led to the Great Recession, relatively few borrowers now have variable-rate mortgages.
However, owing more on a mortgage than selling a house will bring, will keep many of those buyers locked into their houses for longer than they would like, further shrinking the inventory of available houses worth buying and keeping home prices higher than they otherwise would be.