The average rate for a 30-year fixed-rate mortgage rose to 3.94%, up from 3.57% last week. That’s the highest rate since January, according to Freddie Mac. The average rate for a 15-year FRM rose to 3.14% from 2.88%.
Ten-year Treasury yields, which steer mortgage rates, have spiked by more than 35 basis points since the election on investor bets that a Trump presidency will spur growth and inflation, according to Bloomberg. But that’s raising borrowing costs at a time when home prices are also on the rise. All of that could but a serious dent in homebuyer affordability – though some hope an improving job market will help keep housing demand up, Bloomberg reported.
“We were already expecting rates to go up anyway, and this is giving them more of a short-term boost,” Matthew Pointon, US property economist for Capital Economics, told Bloomberg. “If the rise in interest rates is accompanied by higher earnings and banks relax lending standards, that will keep sales rising gradually over the next year.”
The spike in rates is likely to even further depress the demand for refinancing, which has already been falling since July, according to Bloomberg. Mortgage Bankers Association data showed that refinancing applications tumbled 11% in the week ending Nov. 11, hitting their lowest level since March.
Mortgage rates spiked to a 10-month high as investors pulled money out of the bond market in reaction to Donald Trump’s election victory, according to a Bloomberg report.