Mortgage rates topped 3% on a second popular measure this week, adding to evidence that they are now firmly out of record-low territory.
The average interest rate on a 30-year fixed mortgage rose 5 basis points to 3.02% from 2.97% this week, crossing the 3% mark for the first time since July and moving further away from the record low of 2.65% reached in early January, Freddie Mac said Thursday. Taken together with the latest average from the Mortgage Bankers Association—3.23%—the upswing in rates is clear, as are initial signs that higher borrowing costs are dampening interest in what’s been a booming residential real estate market during the pandemic.
“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points, and the impact on purchase demand has been noticeable,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “While purchase activity remains high, it has cooled off over the last few weeks and is currently on par with early March, prior to the pandemic.”
For those still hoping to buy, Thursday’s report wasn’t all bad news. Mortgage rates aren’t likely to continue to rise as quickly as they have been, Khater said.
“The rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season,” he said.