US mortgage rates surge for 4th week as Fed eyes hike

US mortgage rates surge for 4th week as Fed eyes hike

Jan 21, 2022

BLOOMBERG [NEW YORK] Mortgage rates climbed for the 4th consecutive week, reaching the highest level since the start of the pandemic.

The average for a 30-year loan was 3.56 per cent, up from 3.45 per cent last week and the highest since mid-March 2020, Freddie Mac said in a statement Thursday (Jan 20).

Rates followed a recent jump in yields for 10-year Treasuries.

Borrowing costs may continue to increase as the Federal Reserve eyes a rate hike to dampen surging inflation.

That could put the American dream of owning a home further out of reach for those already struggling to find affordable options.

Rates plummeted to a record low roughly a year ago, and cheap borrowing costs have helped fuel a red-hot housing market that's pumped up real estate prices.

"As a result of higher mortgage rates, purchase demand has modestly waned in advance of the spring homebuying season," Sam Khater, Freddie Mac chief economist, said in a statement.

"However, supply remains near historically tight levels and home prices remain high." Still, borrowing costs may level off in the coming weeks, according to Keith Gumbinger, vice president at mortgage-information company HSH.com.

"We're starting to see signs that we might be topping out on rates," Gumbinger said in an interview. "The Federal Reserve has made a bit of a shift, but it's not clear if the shift has completed yet."