Long-term mortgage rates are rising again; 30 year offenses 4.5%

WASHINGTON (AP) — Average long-term U.S. mortgage rates rose again this week, as the key 30-year lending rate rose above 4.5% and hit its highest level since the end of 2018.

Amid inflation at its highest level in four decades, the increases in home loan rates come weeks after the Federal Reserve raised its benchmark short-term interest rate by a quarter of a point – qu ‘it had maintained close to zero since the start of the pandemic recession. two years ago — to cool the economy. The central bank announced potentially up to seven additional rate hikes this year.

These developments mean that mortgage rates will likely continue to rise over the course of the year.

Mortgage buyer Freddie Mac reported on Thursday that the average rate on the 30-year loan this week rose to 4.67% from 4.42% last week. This is a stark contrast to last year’s record mortgage rates of around 3%. A year ago, the 30-year rate was 3.18%.

The average rate on 15-year fixed-rate mortgages, popular among those refinancing their homes, jumped to 3.83% from 3.63% last week.

House prices have risen about 15% over the past year and up to 30% in some cities. Homes available for sale were scarce even before the pandemic began two years ago. Now, rising prices and rising lending rates will make it even harder for potential buyers as the spring home buying season begins.

The government reported on Thursday that a closely watched Fed inflation gauge jumped 6.4% in February from a year earlier, with sharply higher prices for food, gasoline and other necessities weighing on Americans’ finances. The figure was the biggest year-on-year increase in 40 years – since January 1982. Excluding food and energy price volatility, so-called core inflation rose 5.4% in February compared to 12 months earlier.

Strong consumer demand combined with shortages of many goods to fuel the biggest price increases in four decades. Inflation measures are likely to worsen in coming months as Thursday’s report does not reflect the aftermath of Russia’s invasion of Ukraine, which began Feb. 24. The war disrupted world oil markets and accelerated the prices of wheat, nickel and other key commodities. .

Pressured by inflation, US consumers increased their spending by just 0.2% in February, down from a much larger gain of 2.7% in January.

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