Homeowners Seek Refinancing; Mortgage Rates Over 3%
Mortgage rates remain historically low. However, industry observers say borrowers should not misinterpret the surge last week as being the last one in 2021.
WASHINGTON, D.C. – A closely observed survey indicates that mortgage rates on housing loans, largely sought after in the U.S., spiked during the past week.
Householders who opted for refinancing before last week, when mortgage rates were below 3% for several months, currently have a reason to rejoice on account of their prudence and the thousands of dollars they saved.
The increase in mortgage rates last week should be an alarm bell for those who deferred refinancing over expectations of rates falling even lower.
Despite the current rate increases, mortgage rates remain attractive. However, borrowers should not misinterpret the surge last week as being the last one in 2021, said industry observers.
The average 30-year fixed mortgage interest rate rose to 3.01% last week, as compared to 2.88%.
This was reportedly the largest surge in one week since the middle of February, during which time hopes were rising due to the inoculation program against the coronavirus disease in the United States.
Meanwhile, chief economist at Freddie Mac, Sam Khater, attributed the sharp rate increase during the past week to the burgeoning interest in treasury bonds, specifically the TNX. Fixed mortgage rates have a tendency of rising in tandem with an improvement in the yield on TNX.
“Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation and emerging energy supply shortages, which compound other labor and materials shortages,” Khater wrote.
In a recent announcement, the U.S. Federal Reserve Bank said it might slash its per-month purchasing of assets – treasuries and MBS – reaching billions of dollars.
The purchases have maintained mortgage rates at lower levels.
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