30-year mortgages

Wooden house and the inscription Mortgage and up arrow. Raising mortgage rates and tax. The increase in interest charges. Reduced demand for housing. Loan for housing, apartment and property.
Andrii Yalanskyi / Shutterstock

The average for a 30-year fixed-rate mortgage soared on Friday to an average 3.04%, according to Mortgage News Daily's survey of lenders. The website says it's "time to wake up to the new mortgage rate reality."

Rates also have jumped in the closely watched weekly survey from mortgage giant Freddie Mac, though its numbers tend to lag. After three weeks of no movement, the average for a 30-year fixed-rate home loan climbed to 2.81% last week, the highest since mid-November.

Rates were up from an average 2.73%, where they'd stood since mid-January. Despite the increase, mortgages remained much cheaper than they were a year ago, when the average for a 30-year loan was 3.49%, Freddie Mac reported on Thursday.

15-year mortgages

For other popular types of mortgages, rates were mixed last week, according to Freddie Mac.

The average for a 15-year fixed-rate home loan edged up to 2.21%, from 2.19% the previous week. Those shorter-term mortgages, which are a popular choice for refinancing, were averaging 2.99% at this time last year.

5/1 adjustable-rate mortgages

Starter rates on 5/1 adjustable-rate mortgages, or ARMs, slipped to an average 2.77%, down from 2.79%. One year ago, those ARMs were going for an average 3.25%.

The loans have rates that fixed for the first five years and then can "adjust" — up or down — each (one) year.

Mortgage rates follow other interest rates up the hill

legs male athlete runner running uphill on trail background of sky
sportpoint / Shutterstock

Mortgage rates are tagging behind the interest on Treasury bonds, which spiked early last week to the highest level since March.

The pop in Treasury yields "came from positive retail sales numbers and the rebound in homebuilder sentiment, which buoyed bond investors' outlook and drove up interest rates for home mortgages," says George Ratiu, senior economist with Realtor.com.

But investors also fear that as the economy recovers, inflation will bubble up — "something that would reduce the value of bonds’ fixed-payments, and possibly lead the Federal Reserve to raise interest rates and place more upward pressure on yields and mortgage rates," says Zillow's Speakman.

Fed Chairman Jerome Powell has tried to reassure markets that the Fed isn't anywhere close to raising rates. In a recent speech, he also indicated that the central bank will be willing to accept a little inflation if it's good for jobs.

Though mortgage rates are rising now, Freddie Mac chief economist Sam Khater says borrowers will continue to find attractive rates on home loans.

"While there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3% range for the year," Khater says.

Don't 'time the market' and hold out lower rates

Family on a winter vacation spending time together outdoors standing near the house making snowman smiling concentrated
Viktoriia Hnatiuk / Shutterstock

Whatever you do, don't sit back and wait in hopes mortgage rates will tumble back toward their record lows. That's not likely to happen, given what the bond market is doing. If you see a mortgage rate that would work for you and provide a low monthly payment, try to lock it with the lender so it won't slip out of your grasp.

Though homebuyers are facing multiple challenges right now — including high home prices and shortages of houses for sale — homeowners who haven't refinanced yet have no good reasons for not going mortgage shopping.

Research published earlier this month by the mortgage technology and data provider Black Knight showed that 16.7 million homeowners are good candidates to refi and could save an average $303 a month.

To find the best refinance loan, shop around. That's vital, because mortgage rates can vary from one lender to the next. Seek out and compare offers from at least five lenders, because multiple studies have found that getting at least five loan offers is the key to finding a rate that will save you thousands over time.

Then, don't let your comparison shopping skills get rusty — they'll come in handy again when you buy or renew your homeowners insurance. Review rates from multiple insurers to find a lower price on the coverage you need.

About the Author

Doug Whiteman

Doug Whiteman

Editor-in-Chief

Doug Whiteman is the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."

You May Also Like

Here's the Trick to Getting a Tricked-Out Home Office on a Budget

With remote work here to stay, it's worth investing a few bucks in your space.

Refunds Without Returns — and 5 Other Ways Online Shopping Is Getting Better

New software is finally giving consumers the advantage over big businesses.

Here’s How to Find Better Deals When You Shop Online

There’s an easy way to automatically scan for lower prices, and it’s totally free.

Do Big Stores Save You the Most? We Price-Check Our Shopping List

We price-checked our shopping list and found $460 in savings beyond Walmart and Amazon.