Mar 16, 2018

Rates – Then and Now

Freddie Mac stated last week that the average rate on 30-year fixed-rate mortgages climbed to 4.46 percent this week from 4.43 percent last week. This marks the highest average since January 2014. The 30-year rate averaged 4.21 percent a year ago. The 30-year rate averaged 3.78% six months ago. Mortgage rates have been heading upward for the past nine weeks. (Freddie Mac’s average rates quoted include average points charged of 0.50 percent)

Rates – Projections for 2018

Most major housing agencies and groups predicted higher rates for 2018. But no one saw rates approaching these levels in the first 60 days of the year.

Following are rate predictions cast as 2017 came to a close:

  • Mortgage Bankers Association: 4.6%
  • Fannie Mae / Freddie Mac: 4.5%
  • Realtor.com: 4.6% average, reaching 5% by year-end
  • National Association of Realtors: 4.5%
  • Kiplinger: 4.4%
  • National Association of Home Builders: 4.34%

Rates have already met or exceeded two of the six predictions, and the other four are not far off.

Why are mortgage rates rising?

The economy has made a near-full recovery since almost a decade ago when the housing downturn took its toll. Unemployment topped out at 10% during the Great Recession and now sits in the low 4’s. The stock market is booming and housing prices are rising. Inflationary concerns and the monetary policy of the Federal Reserve are the leading concerns that are driving mortgage interest rates higher.