After three weeks of unchanged rates, the average mortgage rate for a 30-year fixed loan jumped 8 basis points to 2.81%, reaching its highest point since mid-November, according to Freddie Mac’s Primary Mortgage Market Survey.
While economic spending has improved, due to the most recent stimulus, supply chain shortages are causing downstream inflation, leading to higher mortgage rates, said Sam Khater, Freddie Mac’s chief economist.
“While there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3 percent range for the year,” Khater said.
Recently, the 10-year yield has struggled to breach 1.20%. However, the uptrend in the bond market since the lows of August 2020 is intact. As vaccination data, COVID cases, and signs of inflation get better, the 10-year yield in time will likely rise, taking mortgage rates higher with it.
As mortgage rates come off of their historic lows, mortgage applications followed suit, dropping for the second week, according to data from the Mortgage Bankers Association. Notably, the refinance share of activity dropped to 69.3% for the week ending Feb. 18, the first time it’s been below 70% since October.
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