Mortgage rates jump to 2.81%

After three weeks of unchanged rates, the average mortgage rate on a 30-year fixed loan jumped 8 basis points to 2.81%, reaching its highest level since mid-November, according to Freddie macPrimary Mortgage Market Survey.

As economic spending has improved, due to the most recent stimulus measures, supply chain shortages are causing downstream inflation, pushing mortgage rates up, said Sam Khater, Freddie’s chief economist. Mac.

“While there are many temporary factors driving rates higher, the underlying economic fundamentals indicate that rates remain in the low range of 3% for the year,” Khater said.

Recently, the 10-year rate has struggled to break above 1.20%. However, the bond market’s uptrend since the August 2020 lows is intact. As immunization data, COVID cases and signs of inflation improve, the 10-year yield will likely rise, dragging mortgage rates with it.

As mortgage rates break their historic lows, mortgage applications have followed suit, falling for the second week, according to data from the Mortgage Bankers Association. Notably, the activity’s refinancing share fell to 69.3% for the week ending February 18, the first time it has been below 70% since October.

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A modest rate hike may just be what the market needs to slow soaring price growth, according to Logan Mohtashami, chief analyst at HousingWire. Healthy price gains peak at nearly 4.6%, but the market is hovering just above 9.5% according to the S&P CoreLogic Case Shiller index, which is currently lagging current data, Mohtashami said.

“For 2021, we have to put down roots for a repeat of what happened in 2013-14 and 2018-19,” Mohtashami said. “Home prices have caught up with per capita income, just like what we saw in 2002. However, mortgage rates are lower today and the demographics are better. “

Overall, 2020 will be a tough year to beat even as the market balances. Mortgage debt balances crossed the $ 10 trillion mark in the fourth quarter of 2020, increasing by $ 182 billion from the third quarter to $ 10.04 billion at the end of December, the Federal Reserve Bank of New York Center for Microeconomic Data said Wednesday.

New mortgage arrangements, driven by record interest rates that propelled refinancings, totaled $ 1.2 trillion in the fourth quarter, beating volumes seen during the historic refinancing boom in the third quarter of 2003, said the New York Fed.

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