According to new federal data, people signing papers for a new home loan will pay the highest interest rates since the pandemic began.
Mortgage rates for the typical 30-year loan have risen to their highest levels since early 2020, as the housing market anticipates Fed rate hikes.
According to Freddie Mac data, the average rate on the benchmark 30-year fixed-rate home loan was 3.56 percent in the week ending Thursday, up from 3.45 percent the previous week.
Mortgage rates were last this high at the start of the pandemic. The average rate in March 2020 was 3.65 percent.
It’s a significant change from mid-November when the average 30-year rate was 3.08 percent.
Expectations from the Federal Reserve, which has signalled that it is likely to raise benchmark US interest rates at least three times this year in an effort to cool down inflation, which is at 40-year highs, are influencing home loan interest rates.
Goldman Sachs analysts said last week that they now expect four rate hikes this year, up from three in previous projections.
People looking for a home loan will have to pay more in interest as rates reach their highest level since the pandemic began.
Furthermore, the Wall Street investment banking firm predicts that the Fed will begin to reduce the size of its balance sheet as early as July, reducing its holdings of nearly $9 trillion in bonds.
Following months of embracing methods aimed at bolstering the US economy during the COVID-19, the central bank’s plan to tighten monetary policy has spooked investors in recent weeks.
Americans are already paying more for goods and services as a result of unprecedented levels of inflation.
According to federal data, consumer prices increased by 7% in the year ending in December.