Mortgage rates surge a quarter percentage point – here's why you should lock in your rate now

Mortgage rates surged once again this week after the Federal Reserve raised interest rates at its March meeting, according to the latest data from Freddie Mac.

The 30-year fixed-rate mortgage increased by 26 basis points to 4.42% annual percentage rate (APR) for the week ending March 24, according to Freddie Mac’s Primary Mortgage Market Survey. This is up from 4.16% last week and 3.17% last year. 

"This week, the 30-year fixed-rate mortgage increased by more than a quarter of a percent as mortgage rates across all loan types continued to move up," Freddie Mac Chief Economist Sam Khater said. "Rising inflation, escalating geopolitical uncertainty and the Federal Reserve’s actions are driving rates higher and weakening consumers’ purchasing power. 

"In short, the rise in mortgage rates, combined with continued house price appreciation, is increasing monthly mortgage payments and quickly affecting homebuyers’ ability to keep up with the market," Khater said.

If you're trying to reduce your monthly mortgage payment as rates rise, comparing lenders to refinance can help you find the lowest interest rate available. Visit Credible to find your personalized mortgage rate without affecting your credit score.

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Interest rates to continue rising

While the 30-year rate hit its highest level since January 2019, other mortgage rates also rose this week, Freddie Mac's data showed. The 15-year mortgage increased to 3.63%, up from 3.39% last week and 2.45% last year. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) increased to 3.36%, up from 3.19% last week and 2.84% last year. 

As the Federal Reserve considers more rate hikes this year in order to combat inflation, mortgage rates are projected to continue rising. 

"Investors reacted to Federal Reserve Chairman Powell’s remarks at the National Association for Business Economics, in which he acknowledged that inflation is ‘much too high,’ and mentioned the option of larger 50 basis point increases in the funds rate at the next meetings," George Ratiu, Realtor.com's manager of economic research, said. "His comments made clear that the central bank feels the current inflation trajectory is unacceptable but didn’t answer the question of how efficient the bank will be in stemming runaway prices without causing broader pains in employment markets or pushing the economy into a recession."

Homeowners who want to refinance their mortgage to lower their interest rate and save on their monthly payment may want to consider doing so before rates rise any further. You can visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.

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Mortgage rates near 5% mark

Current mortgage rates are already approaching the 5% mark after only one rate hike from the central bank in 2022. When the Fed announced its decision to raise rates, it also said several more rate hikes will likely be warranted this year, which will push mortgage rates up even further. 

"The main takeaway is that mortgage rates are already pushing toward 5% before the midpoint of the year, with lenders anecdotally reporting quotes around 4.75% for the 30-year fixed-rate," Ratiu said. "We are approaching a tipping point for housing markets, as an increasing number of buyers are being priced out by rising rates, stagnating real wages and fast-paced inflation."

If you are interested in refinancing your mortgage to get a lower interest rate before rates rise once again, you can contact Credible to speak to a home loan expert and get all of your questions answered.

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