Mortgage rates rose sharply this week, erasing weeks of declines and putting more pressure on Americans to act hastily to secure cheap financing. The 30-year fixed-rate mortgage averaged 2.79% for the week ending January 14, 14 basis points higher than the all-time low set last week, Freddie Mac FMCC reported. A year ago, the 30-year fixed-rate mortgage averaged 3.65%.
The 15-year fixed rate mortgage, meanwhile, only increased seven basis points to an average of 2.23%. The Treasury-indexed 5-year adjustable rate hybrid mortgage averaged 3.12%, 37 basis points more than the previous week. “As Treasury yields have risen, it is putting pressure on mortgage rates to go up,” said Sam Khater, chief economist at Freddie Mac, in the report. Historically, mortgage rates roughly follow the direction of long-term bond yields, including the 10-year Treasury yield. Throughout the pandemic, that relationship weakened from time to time, largely due to capacity constraints within the mortgage industry. Over the past week, the 10-year Treasury posted its longest streak of daily increases in yield since 2017. Yields have risen as investors wait for President-elect Joe Biden and a Democrat-controlled Congress to pass additional stimulus. amid the COVID-19 pandemic. “The economy is still weak currently, but the incoming administration with the support of Congress seems likely to issue considerable additional stimulus, which will help offset the disruption in revenue and spending related to the virus,” said Danielle Hale, chief economist at Realtor. .com. . “Additionally, vaccines and the newly approved stimulus continue to roll out, giving consumers and investors reason to expect brighter things in this new year.” But a “prolonged rally to the upside is far from inevitable,” said Matthew Speakman, economist at Zillow ZG, + 0.14%. Many have criticized the launch of the vaccine in the United States so far as being too slow, and concerns remain about whether government reserves will be sufficient in the long run. Any major setback in lawmakers’ efforts to accelerate the country’s recovery from the pandemic could send rates down again.