A for sale sign outside a home in Seattle. The median price for existing homes rose 13.9% in November from a year earlier to $353,900.
Photo: KAREN DUCEY/REUTERS
Mortgage rates have hit their highest level since March 2020, the month the coronavirus pandemic took hold in the U.S. and roiled markets.
The average rate for a 30-year fixed-rate loan was 3.45% for the week ended Thursday, according to mortgage finance giant Freddie Mac, FMCC -0.75% up from 3.22% a week ago.
Expectations that the Federal Reserve will raise interest rates multiple times this year are driving up mortgage rates, which are closely tied to the 10-year U.S. Treasury.
Rates have now risen for three straight weeks. A year ago, the rate on America’s most popular home loan was 2.79%, just above its record low of 2.65%. Still, rates remain near historic lows.
Higher borrowing costs, combined with record-high home prices, could push some would-be buyers out of the market. The median price for existing homes rose 13.9% in November from a year earlier to $353,900, according to the National Association of Realtors.
“Given the fast pace of home price growth, [higher rates] will likely dampen demand in the near future,” Sam Khater, chief economist at Freddie Mac, said in a statement.
Mortgage payments are already less affordable relative to income than at any time since 2008, according to the Federal Reserve Bank of Atlanta. In early 2021, Americans needed about 29% of their income to cover a mortgage payment on a median-priced home, the Atlanta Fed estimated. That rose to 33% by October.
Write to Orla McCaffrey at orla.mccaffrey@wsj.com
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Appeared in the January 14, 2022, print edition as ‘U.S. Mortgage Rates Reach Highest Level Since March 2020.’
