A “For Sale” sign outside a home in Crockett, California on Tuesday, May 31, 2022.
David Paul Morris | Bloomberg | Getty Images
Mortgage rates have risen sharply this week after retreating for the past three weeks.
According to Mortgage News Daily, the 30-year fix hit 5.36% on Monday and then rose back up to 5.47% on Tuesday. Volatility in global markets pushed bond yields higher on Monday. Mortgage rates are loosely tracking the US 10-year Treasury yield.
The average interest rate on the popular 30-year term loan ended last week at 5.25%. The average interest rate on the popular 30-year term loan ended last week at 5.25%. The last high was 5.67% three weeks ago, but the rate fell as the stock market sold off and bond yields fell.
Tuesday’s jump was likely driven by data released by the US Manufacturing Index.
“The rise in the manufacturing index suggests the economy is not slowing down anytime soon,” wrote Matthew Graham, COO of Mortgage News Daily on the website.
Mortgage interest rates, which are significantly higher than at the beginning of the year, have put the brakes on the red-hot housing market in recent weeks. Real estate agents are reporting lower sales, and demand for home-buying mortgages is also falling.
While both home sales and mortgage demand are falling, house prices are still rising rapidly. Prices are typically around six months behind sales, but the rare dynamic in today’s market – strong demand and very little supply – is still keeping prices high.
National Association of Realtors chief economist Lawrence Yun told CNBC’s Power Lunch Monday, “It is simply inevitable that the rate of rise in home prices will slow in the coming months.”