People signing papers for a new home loan will pay the highest interest rates since the start of the pandemic, according to new data released by the feds.
Mortgage rates for the typical 30-year loan have climbed to their steepest levels since early 2020 as the housing market looks to expected Federal Reserve rate hikes.
The average rate on the benchmark 30-year fixed-rate home loan was 3.56% in the week ending on Thursday — up from a 3.45% average last week, according to data from mortgage giant Freddie Mac.
The last time mortgage rates were this high was at the start of the pandemic. In March 2020, the average rate was 3.65%.
It’s a big move from just as recently as mid-November, when the average 30-year rate was 3.08%.
Interest rates on home loans are being affected by expectations from the Federal Reserve, which has signaled that it’s likely to hike benchmark US interest rates at least three times this year in an effort to cool down inflation, which is stuck at 40-year highs.
Analysts at Goldman Sachs said last week that they now expect even more rate hikes — four — this year, up from three hikes in its previous projections.
Additionally, the Wall Street investment banking giant projects the Fed will start to slash the size of its balance sheet by as early as July, shrinking its holdings of nearly $9 trillion in bonds.
The central bank’s plan to tighten monetary policy, after months of embracing methods meant to bolster the US economy during the COVID-19, has spooked investors in recent weeks.
Americans are already paying more for goods and services thanks to soaring levels of inflation not seen in four decades.
Consumer prices jumped by 7% for the year ending in December, according to federal data.