Mortgage rates rising amid uptick in US economic confidence: Freddie Mac

Homeowners can still lower their rate through a refinance

Mortgage rates rose over the past week, and economist say the increases will continue, but this is how Americans can keep their rates low.  (iStock)

Mortgage interest rates rose once again, hitting 3.14% for the average 30-year fixed-rate loan as confidence in today’s economy and recovery from the COVID-19 pandemic increases, according to the latest Primary Mortgage Market Survey from Freddie Mac.

"The yield on the 10-year Treasury note has been trending up due to the decline in new COVID cases, increasing consumer optimism, as well as broadening inflation and persistent shortages," Freddie Mac Chief Economist Sam Khater said. "Mortgage rates are also rising, but purchase demand remains firm, showing that latent purchase demand exists among consumers."

If you're interested in taking out a mortgage refinance to lower your monthly payments before interest rates increase, visit Credible to find your personalized interest rate without affecting your credit score.


Economic recovery remains strong, pushing up rates

The 30-year mortgage increased to 3.14% annual percentage rate (APR) for the week ending Oct 28, up from 3.09% the week before. This was down from 2.81% last year. The 15-year mortgage also grew from 2.33% to 2.37% during that same period, but remained higher than last year’s 2.32%.

The average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage increased slightly, from 2.54% to 2.56%, but remained below last year’s 2.88%. 

"Investors sent mortgage rates higher following this week’s raft of positive economic indicators, including a solid rebound in consumer confidence, rising new home sales and strong earnings reports," said George Ratiu, manager of economic research. "The advance estimate for third quarter gross domestic product showed the economy expanded, even though the gain came in below expectations. 

"Consumer confidence is at the core of these economic gains, and as the number of COVID cases continues to drop, the outlook for the upcoming holiday retail season looks brighter, as long as U.S. ports can manage to offload a long line of cargo ships," Ratiu said. "And this positive economic outlook usually means higher mortgage rates for consumers."

Borrowers may want to consider refinancing now before interest rates rise even further. If you want to see how much you can save on your mortgage payments with a lower interest rate, visit Credible to get rate quotes from multiple lenders at once and choose the best mortgage lender for you.


How consumers can keep their rates low

Although interest rates are rising, they still remain near historic lows, giving homeowners another chance to lower their rates before increasing as the Federal Reserve changes its monetary policy.

"With the Fed expected to announce a tapering of its asset purchases in light of stronger employment and higher inflation, I expect rates to continue rising," Chief Economist Danielle Hale said. 

Homebuyers may also now have the opportunity to enter the housing market on the home purchase front while rates remain low, but market competition is slowing. 

"Real estate markets are showing signs of a new equilibrium, marked by a steady pace of transactions, and more moderate price growth," Hale said. "As more homeowners list their houses for sale, these homes are spending more time on the market. A good number of cities that were fraught with bidding wars earlier this year are finding a calmer housing landscape, where price reductions are bringing sky-high asking prices back down to earth. While the market remains brisk, there are fewer competing offers, and contingencies have returned, both clear signs of a healthier housing market."

If you are interested in refinancing your mortgage to lower your monthly payments or you want to take out a new mortgage amid current rates, contact Credible to speak to a home loan expert and get all of your questions answered, like what to expect for closing costs, down payment options and even loan types.

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