Time may be running out to get the best rate on a home loan.
This week, mortgage rates rose to their highest level since May 2020 and are now more than 0.5% higher than they were in January 2021, according to the Freddie Mac Primary Mortgage Market Survey released today.
Freddie Mac, formally known as the Federal Home Loan Mortgage Corp., is a government-sponsored company. It helps foster stability and affordability in the housing market by purchasing mortgages that meet certain standards from lenders. That in turn helps lenders provide more loans to qualified buyers.
The trend toward higher mortgage rates may continue for a while. In a press release, Sam Khater, Freddie Mac chief economist, says:
“With higher inflation, promising economic growth and a tight labor market, we expect rates will continue to rise.”
This week, a 30-year fixed-rate mortgage averaged 3.22%. One year ago, the rate was 2.65%.
Meanwhile, a 15-year fixed-rate mortgage averaged 2.43%, up from 2.16% one year ago.
Freddie Mac’s Primary Mortgage Market Survey focuses on conventional home purchase loans for borrowers who make a 20% down payment and have excellent credit.
Of course, the forecast that rates will go higher is only a prediction. No one knows for sure where mortgage rates are headed. Over the past couple of decades, forecasters often have said rates couldn’t go much lower, only to have reality prove them wrong.
Still, there are multiple factors pushing rates higher. Not only is inflation showing up in prices everywhere, but there are now whispers that the Federal Reserve might raise the federal funds rate in March, much earlier than many experts had expected.
Although mortgage rates do not rise in lockstep with increases in the federal funds rate, the two rates generally move in the same direction.
So, if you want to lock in a great rate, now might be the time. You can look up refinance rates for lenders such as Better, a Money Talks News partner, right on the lenders’ websites.