Mortgage rates for Feb. 17
Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national averages. The survey is based on home purchase mortgages. Rates for refinances may be different. It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.
The 15-year fixed-rate average jumped to 3.15 percent with an average 0.8 point. It was 2.93 percent a week ago and 2.21 percent a year ago. The five-year adjustable rate average climbed to 2.98 percent with an average 0.3 point. It was 2.8 percent a week ago and 2.77 percent a year ago.
“Mortgage rates jumped again due to high inflation and stronger-than-expected consumer spending,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The 30-year fixed-rate mortgage is nearing 4 percent, reaching highs we have not seen since May 2019. As rates and house prices rise, affordability has become a substantial hurdle for potential homebuyers, especially as inflation threatens to place a strain on consumer budgets.”
After last week’s inflation report, which showed prices rose 7.5 percent in January, the yield on the 10-year Treasury closed above 2 percent for the first time since July 2019. It dipped briefly below 2 percent after concerns about a Russian invasion into Ukraine but has remained above that mark since Tuesday. It closed at 2.03 percent on Wednesday. The movement of the 10-year Treasury tends to be one of the best indicators of where mortgage rates are headed.
“The main factor pushing rates up last week was consumer price data, which showed prices increasing at the highest rate since early 1982 and broad increases across goods and services,” said Paul Thomas, vice president of capital markets at Zillow. “Investors are anticipating aggressive actions by the Federal Reserve to rein in inflation, driving rates higher. Markets will be focused on updates from the Federal Reserve this week and any developments with the situation in Ukraine, either of which could cause additional rate fluctuations.”
The minutes from the Federal Reserve’s January meeting, which were released this week, contained no surprises. The Fed has been signaling for some time now that it will probably raise its benchmark interest rate in March and that it will reduce its balance sheet. The central bank does not set mortgage rates, but its actions often influence them.
“Policymakers at the Federal Reserve are having an unusual public debate about how fast they should raise interest rates,” Holden Lewis, a home and mortgage specialist at NerdWallet, wrote in an email. “A cautious group favors raising short-term rates by a quarter of a percentage point. A ‘shock-and-awe’ contingent wants to boost by twice as much, and markets believe this more-aggressive bunch will prevail. Meanwhile, some influential voices inside the Fed want to target mortgage rates, specifically, for an upward push.”
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