Rise in mortgage rates stabilizes; don't expect it to last

Amid an otherwise consistent pattern of steep hikes, mortgage rates dipped this week for only the second time since late September. The average rate for a 30-year mortgage dropped back to 3.09 percent this week, according to Freddie Mac’s latest lender survey. That’s down from 3.14 percent the week before, but significantly higher than the 2.88 percent rates that were reported Sept. 30. “While mortgage rates fell after several weeks on the rise, we expect future upticks due to stronger economic data and as the Federal Reserve pulls back on its stimulus,” Freddie Mac Chief Economist Sam Khater said in a statement. “That said, the housing market remains favorable for consumers, as rates remain below pre-pandemic levels and continue to support sustainable purchase and refinance opportunities.” For the week ending Nov. 4, Freddie Mac’s weekly Primary Mortgage Market Survey reported average rates for the following types of loans:

• For 30-year fixed-rate mortgages, rates averaged 3.09 percent with an average 0.7 point, down from last week’s 3.14 percent figure and higher than its 2.78 percent mark from a year ago. Rates for 30-year loans hit an all-time low of 2.65 percent during the week ending Jan. 7, 2021, according to records dating to 1971.
• Rates for 15-year fixed-rate mortgages averaged 2.35 percent with an average 0.6 point, ticking down slightly from last week’s 2.37 percent while remaining slightly higher than its 2.32 percent mark a year ago. The all-time low rate for 15-year loans was 2.10 percent set the week ending Aug. 5, 2021, according to records dating to 1991.
• For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.54 percent with an average 0.3 point, down slightly from 2.56 percent last week and lower than 2.89 percent a year ago. Rates on 5-year ARM loans are still resting above the record-low 2.40 percent rate set during the week ending Aug. 5, 2021.

The survey reports average rates for borrowers with excellent credit who are able to put 20 percent down on a home. The rates assume an average discount point, which is also reported above. Borrowers with lower scores, or different point assumptions, can expect different rates. The dip in rates coincides with a still-healthy demand for houses, even as demand for purchase loans appears to have been held back by the rising rates and low inventory, Mortgage Bankers Association forecaster Joel Kan said in a statement earlier this week. Mortgage rates have also been held down in part by the Federal Reserve’s support for the American economy during the pandemic, which the central bank is beginning to scale back. The recent rate dip is small compared to the overall rise in mortgage rates that the market has seen over the previous six weeks. “The yield on the 10-year Treasury note has been trending up due to the decline in new COVID cases, increasing consumer optimism, as well as broadening inflation and persistent shortages,” Khater said in a statement last week.