For the fourth consecutive week, mortgage rates jumped, up more than 90 basis points in one month.
Rates rose from 3.76% to 4.67% in March alone, dramatically increasing borrowing costs for buyers, wrote Nadia Evangelou, senior economist and director of forecasting at the National Association of REALTORS®, for the association’s blog.
The monthly payment for a median-priced home with a 30-year fixed-rate mortgage rose more than $170 in March due to higher rates, Evangelou notes.
In the past three months, this amount has increased further. For example, LendingTree offers the following example: A 30-year fixed rate mortgage worth $300,000 would have cost a buyer approximately $1,283 per month with an average rate as of December 30, 2021 of 3.11 %. But at the current average rate of 4.67%, that monthly cost has risen to $1,551, an increase of $268 per month, $3,216 per year, and $96,480 over the life of the loan.
Yet even with the latest mortgage rate hike, borrowing costs remain low by historical standards. From 2002 to 2009, rates were generally between 5% and 6.5%, LendingTree notes.
However, buyers are facing higher asking prices for homes, and rates are expected to continue to rise.
“Mortgage rates have continued to rise in the face of rapidly rising inflation as well as the prospect of strong demand for goods and continued supply disruptions,” said Sam Khater, chief economist at Freddie Mac. “Buying demand weakened slightly but continued to beat expectations. This was largely due to unmet demand from first-time home buyers as well as a select few who were waiting for rates to hit a cyclical low. .
Freddie Mac reports the following national averages with mortgage rates for the week ending March 31:
- 30-Year Fixed Rate Mortgages: average of 4.67%, with an average of 0.8 points, compared to 4.42% last week. Last year at this time, 30-year rates averaged 3.18%.
- 15-year fixed rate mortgages: average of 3.83%, with an average of 0.8 points, up from last week’s average of 3.63%. A year ago at the same date, 15-year rates averaged 2.45%.
- 5-Year Hybrid Adjustable Rate Mortgages: an average of 3.50%, with an average of 0.3 points, against 3.36% last week. A year ago, the 5-year ARMS averaged 2.84%.
Freddie Mac reports commitment rates along with average points to better reflect the total upfront cost of getting the mortgage.