Mortgage rates surge to highest point since before COVID-19 pandemic

Here's how to secure a low interest rate as increases are expected to continue

Mortgage rates surged this week as the housing market prepares for the Federal Reserve to hike interest rates. (iStock)

Mortgage rates increased this week, rising to the highest point since January 2020 – a trend that is expected to continue through the remainder of the year, according to the latest data from Freddie Mac.

The 30-year fixed-rate mortgage rose to 3.69% annual percentage rate (APR) for the week ending Feb. 10, according to Freddie Mac’s Primary Mortgage Market Survey. This is up from 3.55% last week and 2.73% last year. 

"The normalization of the economy continues as mortgage rates jumped to the highest level since the emergence of the pandemic," Freddie Mac Chief Economist Sam Khater said. "Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on homebuyer demand."

If you want to take advantage of mortgage rates before they increase further, you could consider refinancing to save money on your monthly payments. Visit Credible to find your personalized rate without affecting your credit score.


Fed's upcoming rate hike impacting mortgage rates

Other types of mortgages also saw strong rate increases this week. The average 15-year mortgage rose to 2.93%, up from 2.77% last week and 2.19% last year. The five-year Treasury-indexed hybrid adjustable-rate mortgage also increased to 2.8%, up from 2.71% last week and 2.79% last year. 

Mortgage interest rates have continued to edge higher ahead of the Federal Reserve's first expected rate hike in 2022. 

"The stronger-than-expected employment report for January and rising inflation – which accelerated further in January – are keeping investors bullish on the economy and the expected rate hikes from the Federal Reserve in the first half of the year," George Ratiu, manager of economic research, said.

If you're interested in refinancing your mortgage before this year’s anticipated rate hikes, you could visit Credible to compare multiple mortgage lenders at once and choose the best option for you.


Homebuyers struggle to enter housing market

As mortgage rates rise, many borrowers are eager to buy a home before rates increase any further, Ratiu said. However, the shortage of homes available for sale is keeping many potential homebuyers out of the market. 

"Real estate markets are caught in a lopsided dynamic with many buyers eager to find the right home before rates rise even higher, but very few available homes for sale as a result of almost a decade and a half of underbuilding," Ratiu said. "Based on’s latest research, the shortage of new homes accelerated in 2021, passing 5.8 million at the end of the year. With millennials and Gen Z forming households at faster rates, new home construction would have to triple the rate of home completions to close the gap in 5 to 6 years."

Homeowners can also take advantage of the current mortgage rates by tapping into their increasing home value through a cash-out refinance. Contact Credible to speak to a home loan expert and get all of your questions answered and see how refinancing could affect your monthly mortgage payment.

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