Mortgage rates surge once again – here’s how to keep your rate down

Mortgage rates surged once again this week as the market anticipates new moves from the Federal Reserve to combat inflation.  (iStock)

Mortgage rates surged this week, with the 30-year fixed-rate loan edging closer to 5%, according to the latest data from Freddie Mac.

The 30-year mortgage increased to 4.72% annual percentage rate (APR) for the week ending April 7, according to the Primary Mortgage Market Survey from Freddie Mac. This is up from 4.67% last week and 3.13% last year. 

"Mortgage rates have increased 1.5 percentage points over the last three months alone, the fastest three-month rise since May of 1994," Freddie Mac Chief Economist Sam Khater said. "The increase in mortgage rates has softened purchase activity such that the monthly payment for those looking to buy a home has risen by at least 20% from a year ago."

Interest rates could continue to rise in the coming months, but borrowers can still take advantage of current rates through a mortgage refinance. Visit Credible to find your personalized rate without affecting your credit score.

FEDERAL RESERVE RAISES INTEREST RATES: WHAT TO DO NOW

Fed works to combat inflation by raising rates

Mortgage rates across other loan types also rose this week. The 15-year mortgage rate increased to 3.91%, up from 3.83% last week and 2.42% last year. And the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) increased to 3.56%, up from 3.5% last week and 2.92% last year.

"Investors are digesting this week’s remarks by a number of Federal Reserve presidents which echo Chairman Powell’s stated concerns that inflation is on an aggressive path which threatens to derail the economy by cutting consumer spending," George Ratiu, Realtor.com's manager of economic research, said. "The Fed is using forward guidance to inform markets that the bank will take a much harder turn in its monetary tightening to stem what it implicitly acknowledges is a case of runaway inflation. 

"After spending the better part of 2021 downplaying inflation concerns as ‘transitory,’ the Fed finds itself behind the eight ball, needing to unwind an unprecedented quantitative easing platform," Ratiu continued. "For lenders and mortgage originators, the labor shortage driving strong employment gains combined with rising prices, is adding upward pressure on costs leading to higher rates."

If you are interested in lowering your mortgage payment or shortening your loan term, you could consider refinancing. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best rate for you.

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Mortgage rates on course to surpass 5%

Mortgage interest rates are rising, and are likely to continue on this path in the year ahead as the Fed continues to raise rates. Ratiu forecasted that the 30-year mortgage rate will soon pass 5%. 

"The bottom line is that mortgage rates are on course to surpass 5%, a level not seen since February 2011, when the typical home in the U.S. was priced at just $166,000 – less than half the price of today’s typical home," he said.

If you are interested in refinancing your mortgage before rates hit the 5% mark, you can contact Credible to speak to a home loan expert and see if this is the right option for you.

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