NEW YORK (Agencies): Following the Federal Reserve’s first interest rate hike since 2018 the day prior, mortgages climbed past 4% for the first time since May 2019 on Thursday.
In the week ending March 17, a 30-year fixed-rate mortgage averaged 4.16%, up from 3.85% the week before, CNN reports.
Wednesday, the Fed raised interest rates, also known as the fed funds rate, by 25 basis points (BPS) to a range of 25 BPS-50 BPS.
Mortgages are not directly tied to the fed funds rate — but to 10-year Treasury bonds, which in and of themselves are tied to the fed funds rate and other movements by the Fed.
The Fed also indicated that it would raise interest rates a total of six times in 2022 to a target of 2%.
“The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year,” Sam Khater, chief economist for Freddie Mac, told CNN.
George Ratiu, manager of economic research at Realtor.com, added: “Inflation is unlikely to slow down any time soon. Investors are reacting to the deepening war in Ukraine and expecting renewed supply chain disruptions to add additional pressures on consumer prices.
“The days of sub-3% interest rates are firmly behind us.”