Mortgage rates reach their highest level since May 2019

While geopolitical concerns put markets on edge, the weight of inflation pushed mortgage rates higher over the past week, according to Freddie Mac.

The average 30-year fixed-rate mortgage increased by 23 basis points for the seven-day period ending Feb. 17, landing at 3.92% based on data from Freddie Mac’s Primary Mortgage Market Survey. One week earlier, the average came in at 3.69%, and during the same week in 2021, the 30-year rate stood more than a full percentage point lower at 2.81%.

“Mortgage rates jumped again due to high inflation and stronger than expected consumer spending,” said Sam Khater, Freddie Mac’s chief economist, in a press release. “The 30-year fixed-rate mortgage is nearing 4%, reaching highs we have not seen since May 2019.”

The latest rise in consumer prices has economists warning of further rate movements to come. January’s surge of 7.5% was the highest since 1982.

“Investors are anticipating aggressive actions by the Federal Reserve to rein in inflation, driving rates higher,” said Paul Thomas, Zillow vice president of capital markets, in a research blog post. Thomas also added that any escalation of the situation in Ukraine, might also cause additional rate fluctuations.

The latest minutes from January’s Federal Open Market Committee posted this week pointed to the possibility that federal rate hikes could come more frequently than previously anticipated, as the economy continues to strengthen. Fear of an impending war between Russia and Ukraine also sent Treasury yields crashing, before a turnaround early this week.

Even though volatility was expected in early 2022, recent news developments have led to one of the bumpiest weeks in some time, “reminiscent of the February-March lead-up to the COVID shutdowns in 2020,” said Robert Heck, vice president of mortgage at online marketplace Morty, in an emailed statement. Current uncertainty likely means a likely see-saw pattern for mortgage rates, rather than a consistent trajectory.

“While rates are on the rise overall, they are unlikely to trend directly upward, meaning that volatility will continue,” he added.

In tandem with the rise of the 30-year rate, the 15-year fixed-rate mortgage also made a jump of over 20 basis points from the previous week to average 3.15%, up from 2.93%. One year ago, the 15-year average was 2.21%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage increased as well, rising for the sixth consecutive week, to 2.98%. A week earlier, the adjustable-rate average sat at 2.8%, while in the same time frame of 2021, it came in at 2.77%.