Should Consumers Panic With Rising Mortgage Rates?

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Real Estate

Economists expect mortgage rates to continue to increase modestly over the next few months. With the 30-year fixed-rate mortgage averaged 3.01% this week, it will post a sharp rise after spending nearly four months below 3%.

 

Sam Khater - Freddie Mac’s chief economist:

“Mortgage rates rose across all loan types this week as the 10-year Treasury yield reached its highest point since June. Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation, and emerging energy supply shortages, which compound other labor and materials shortages.”

An increase in mortgage rate over the next few months will most likely have an impact on home prices, causing them to moderate after increasing over the last year.

Still, mortgage rates are hovering near their record lows. “Consumers shouldn’t panic,” Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS®, writes on the association’s blog. “Keep in mind that even though rates will increase in the following months, these rates will still be historically low.” NAR forecasts the 30-year fixed-rate mortgage to average 3.5% by mid-2022.