US mortgage rates in change direction, rising to 3.85%

Mar 12, 2022

New York

(BLOOMBERG) Mortgage rates in the United States rose for the first time in 3 weeks. The average for a 30-year loan was 3.85 per cent, up from 3.76 per cent last week, Freddie Mac said in a statement on Thursday (Mar 10).

The prospect of homeownership is fading for many as escalating purchase prices and inflation at a 40-year high erode Americans' buying power. Competition is poised to intensify as the housing market enters its busiest season with the supply of listings at a record low.

While mortgage rates are expected to climb in the long run, the short-term outlook is unpredictable as the Russia-Ukraine war roils global markets. The Federal Reserve is widely expected to raise its benchmark interest rate by 25 basis points at its board meeting next week.

But surging oil prices will deepen inflation and put even more pressure on the Fed to respond aggressively, said Melissa Cohn, a banker and regional vice president at William Raveis Mortgage. "We're in uncharted waters with this war," she added. "Unfortunately, I think we're headed for a period where we're going to have to buckle up, it's going to be a bumpy ride."

At the beginning of the year, Cohn did not expect mortgage rates would hit 4 per cent in 2022. Now, she said, rates could rise to 4.5 per cent or higher.

The 30-year average is up sharply from its record low of 2.65 per cent, reached in January 2021.