Mortgage rates up slightly this week to still low 3.12%

SILVER SPRING, Md. (AP) – The average interest rate on a long-term mortgage in the United States has risen slightly this week but remains historically low just as the Federal Reserve announces it will begin to tighten credit.

Mortgage buyer Freddie Mac said on Thursday that the average 30-year fixed-rate benchmark home loan rate was up this week to 3.12% from 3.10% last week. A year ago, the rate stood at 2.67%.

The average rate on a 15-year mortgage fell again this week, to 2.34% from 2.38% last week. A year ago, this rate was 2.21%.

On Wednesday, the Federal Reserve announced as planned that it would begin to cut back on its monthly bond purchases – which are aimed at lowering long-term rates – to combat accelerating inflation. The move could increase borrowing costs across the economy over the next few months, but policy changes don’t always immediately affect other borrowing rates. Even with three rate hikes next year, its benchmark rate would still be historically low, below 1%.

Demand for housing has increased during the pandemic as people seek more space after being locked in their homes for nearly two years. Even with interest rates at their lowest, many potential buyers were left empty-handed due to limited supply and house prices around 20% higher than a year ago.

Builders have struggled to keep up with demand as supply chain outages continue to delay projects, exacerbating the lack of available housing and skyrocketing prices.

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