Mortgage Rates Highest Since October 2019

Following strong employment in January, the most prevalent 30-year fixed mortgage rate is steadily rising toward 4.0%, the highest since October 2019, Bill McBride reports in the CalculatedRisk Newsletter. Rates are still historically very low, but have risen sharply from recent lows. Higher rates will impact affordability, but housing inventory will remain a much higher priority for builders, particularly after month-end active listings reached a historic low of 1,184 from December 2021 to January 2022.

With the ten-year yield at 1.93%, and based on an historical relationship, 30-year rates should currently be around 3.8%. So, mortgage rates are as expected based on the ten-year yield.

If the ten-year yield rises to around 2.15%, then 30-year mortgage rates will likely increase to around 4.0%.

Of course, rates are still historically very low. But rates are up sharply from the recent lows.

Higher rates will impact affordability. Based on today’s mortgage rates, affordability has declined to levels not seen since the housing bust (I’ll have more on this later this month).

Read more