WASHINGTON — Average long-term U.S. mortgage rates rose this week, with the key 30-year loan above 4% for the first time since May 2019.
The increase came amid expectations that with inflation at its highest level in four decades, the Federal Reserve would raise its benchmark short-term interest rate at its policy meeting this week. to cool the economy.
The move came on Wednesday, as the Fed raised the key rate — which it had kept near zero since the pandemic recession hit two years ago — by a quarter point. And the central bank announced potentially up to seven more rate hikes this year.
The increases mean that mortgage rates will likely continue to rise over the course of the year.
Mortgage buyer Freddie Mac reported on March 17 that the average rate on the 30-year loan this week rose to 4.16% from 3.85% seven days earlier. This is in stark contrast to record mortgage rates of less than 3% last year. A year ago, the 30-year rate was 3.09%.
The average rate on 15-year fixed-rate mortgages, popular among borrowers refinancing their homes, climbed to 3.39% from 3.09% last week.
House prices have risen around 15% over the past year and up to 30% in some markets. Homes available for sale were scarce, including in Charleston, even before the pandemic hit two years ago. Now, rising prices and rising lending rates will make it even harder for potential buyers as spring home buying season approaches.
The government announced this week that wholesale inflation in the United States rose 10% last month from a year earlier – another sign that inflationary pressures remain intense at all levels of the economy. The report did not include price changes after Feb. 15, missing a spike in energy prices when Russia invaded Ukraine nine days later.