Mortgage Rates in U.S. Soar to the Highest Since March 2020

(Bloomberg) — Mortgage rates in the U.S. rose for a third straight week, reaching the highest point in almost two years.

The average for a 30-year loan was 3.45%, up from 3.22% last week and the highest since March 2020, Freddie Mac said in a statement Thursday.

Rates tracked a jump in yields for 10-year Treasuries, which climbed to levels not seen since early 2020, before the pandemic roiled financial markets. Signs point to borrowing costs rising further as the job market improves and the Federal Reserve steps up its efforts to tame inflation.

That would increase the burden on homebuyers who are already stretching to afford a purchase. Rates for 30-year mortgages tumbled to a record low a little more than a year ago. Cheap loans have helped fuel a housing rally that’s still running hot even as home prices soar out of reach for many Americans.

“The rise in mortgage rates so far this year has not yet affected purchase demand,” Sam Khater, Freddie Mac’s chief economist, said in the statement. “But given the fast pace of home price growth, it will likely dampen demand in the near future.”

There are some indications that inflation may be easing, with an index measuring prices paid to U.S. producers coming in lower than expected.

“If inflation cools off, interest rates will level,” said Keith Gumbinger, vice president at mortgage-information company HSH.com.

At the current average rate monthly payment, the monthly payment on a $300,000 mortgage would be $1,339. That’s up from $1,209 at the record low of 2.65%, reached in January 2021.

(Updates with Gumbinger comment and monthly payment in last three paragraphs.)