Mortgage rates rise above 3% for the first time in a year

The mortgage rates of the past week increased above the 3% mark, hitting the highest level since April.

The 30-year fixed-rate mortgage averaged 3.05% for the week ending Oct. 14, up six basis points from the previous week, Freddie Mac FMCC, reported Thursday. The high point of the benchmark mortgage product this year came in April where the rate for 30-year loans peaked at 3.18%.

The 15 - year fixed-rate mortgage rose seven basis points to an average of 2.3%, while the 5 - year fixed-rate mortgage expanded by three basis points to an average of 2.55%.

The increase in interest rates occurred this week despite the downward trajectory of the 10-year Treasury yield TMUBMUSD 10 Y, as investors reacted to higher than anticipated inflation and more than 10 million unfilled job openings, said George Ratiu, manager of economic research at Realtor.com.

Inflationary concerns persist across the economy — and runaway housing costs are a major factor behind the rise in consumer prices in recent months. Even with today s somewhat disappointing jobs report for September, the Federal Reserve has enough money to proceed with its plan to taper its asset-purchase program that s been in place since the beginning of the pandemic, said Zillow Z, ZG, Vice President of Capital Markets Paul Thomas.

Economic data coming later this week — such as the Producer Price Index and Retail Sales — will provide additional signals on inflation and economic recovery, both of which will have an impact on rates in the coming week, Thomas said.

The positive news for home buyers is that the inventory situation is much better than earlier this year, which should help to temper the breakneck pace of home price growth seen over the spring and summer.

It seems that buyers and sellers are finally taking a step back from the pandemic stampede of the past year to regain their footing and evaluate their next steps, Ratiu said.

Still, anyone looking to buy will need to factor spending an additional $125 each month compared to one year ago due to the higher in both mortgage rates and home prices, Ratiu said. And with affordability always in your mind, especially for first-time home buyers, higher monthly mortgage payments could cause even more people to get cold feet about buying property.