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The benchmark interest rates for home loans jumped back above 3% as inflation-related concerns prevailed.
The 15-year fixed-rate mortgage also increased by 12 basis points to an average of 2.39%. The 5-year Treasury-indexed adjustable-rate mortgage averaged 2.49%, down four basis points from the previous week.
“The combination of rising inflation and consumer spending is driving mortgage rates higher,” Freddie Mac chief economist Sam Khater said in the report.
This week’s increase could be a sign of what’s to come further down the road. The most recent data on retail sales was strong in spite of record-breaking price increases, which suggests that the economic recovery from the pandemic continues to have momentum, said Paul Thomas, vice president of capital markets at Zillow Z, -4.63% ZG, -4.89%.
“If the economic recovery holds, this continuing inflation trend may increase the probability of the Federal Reserve instituting several rate hikes in 2022,” Thomas said, adding that in the near term supply chain-related issues could put upward pressure on interest rates.
For home buyers, the increase in mortgage rates comes at a time when home prices continue to rise at a steady pace. But marginal relief may be in sight.
Survey data from Realtor.com showed that the share of existing homeowners who plan to sell their homes within the next year has increased from 10% this spring to 26% this fall. Should these homeowners follow through with their plans, that could added a much need boost of supply to the housing market. Buyers would then have more options, and the pace of home-price growth could slow a bit
“We have seen an uptick in new listings over the last two weeks, and that has helped keep price growth in check,” said George Ratiu, manager of economic research at Realtor.com. “However, demand from buyers continues to be strong, keeping inventory moving quickly, especially for well-priced homes.”
Source: This post first appeared on http://marketwatch.com/