Mortgage rates reach the highest level since April

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Real Estate

The average 30-year-fixed mortgage rose seven basis points to 3.05% for the week ending Oct. 14, to its highest level since April, according to Freddie Mac’s latest PMMS survey of mortgage rates.

Two weeks ago, rates rose 13 basis points to 3.01%, eclipsing the 3% mark for the first time since June. However, last week, rates fell to 2.99%. Mortgage rates typically move in tandem with the 10-year U.S. Treasury yield, which was 1.56% for Oct. 14.

Sam Khater, Freddie Mac’s chief economist, said in a statement that “as inflationary pressure builds due to the ongoing pandemic and tightening monetary policy, we expect rates to continue a modest upswing.”

Mortgage rates have been kept low in part because of the Federal Reserve’s massive monthly purchases of $120 billion in U.S. Treasury bonds and mortgage-backed securities. The central bank has signaled that will eventually come to an end, however, and it is expected to begin to taper off its purchases when substantial further progress is made in the labor market.

Although rates remain at historic lows for now, market observers do expect rates to climb upward, eventually. Even a modest increase in rates could deter borrowers from seeking to refinance their mortgages.

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