Omicron variant holds mortgage rates steady for third consecutive week

The COVID-19 omicron variant held mortgage rates steady for the third consecutive week as economic growth lost steam in January, according to the latest data from Freddie Mac.

The 30-year fixed-rate mortgage remained unchanged from last week, resting at 3.55% annual percentage rate (APR) for the week ending Feb 3. That's up from this same time last year when it hit 2.73%.

"The economy lost some momentum in January, leaving mortgage rates unchanged from last week and relatively flat for the third consecutive week," Freddie Mac Chief Economist Sam Khater said. "This stagnation reflects the economic impact of the omicron variant of COVID-19, which we believe will subside in the coming months."

If you want to take advantage of mortgage interest rates while they remain low, consider refinancing your home loan to lower your monthly payments. Visit Credible to find your personalized interest rate without affecting your credit score.

HOW TO GET THE BEST MORTGAGE RATE AS COMPETITION FOR BUSINESS RISES AMONG LENDERS

Mortgage rates expected to increase in weeks ahead

Another type of mortgage saw a slight decrease this week. The 15-year mortgage rate dropped to 2.77%, down from 2.8% last week and up from 2.21% last year. Meanwhile, the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) increased slightly to 2.71%, up from 2.7% last week but down from 2.78% last year. 

"As economic recovery continues going into the spring and summer, mortgage rates are expected to resume their upward trajectory," Khater said. "In the meantime, recent data suggests that homebuyer demand continues to be elevated as supply remains low, driving higher home prices."

If you want to take out a mortgage on a new home or refinance your current loan amount, shopping for rates from multiple mortgage lenders can help you get a lower interest rate. Visit Credible to compare rates from multiple lenders in minutes and get the lowest rate available to you.

US HOUSING LESS AFFORDABLE THAN ANY POINT IN OVER A DECADE, ATTOM REPORT SHOWS

Rising rates spur homebuyers to action

Despite the recent rise in rates, homebuyer demand is not easing, one expert said. This is sending home prices even higher and lowering affordability for borrowers. 

"So far, housing data has indicated that rising mortgage rates are creating a sense of urgency, rather than deterring potential homebuyers, and prices continue to rise while the few homes available for sale are snapped up quickly," Realtor.com Chief Economist Danielle Hale said. "These conditions can be especially challenging for first-time homebuyers already grappling with rising rents that make it difficult to save for a down payment."

Although rates have been steadily trending upward as of late, it is likely just the beginning as the Federal Reserve prepares to hike rates in March. 

"Last week’s Fed meeting reinforced that interest rates will continue to move higher, with Fed rate hikes likely to begin as soon as March," Hale said. "However, the Fed’s statement merely confirmed what investors already expected – that these rate hikes are warranted to tame ongoing inflation."

If you want to take advantage of rates before they rise to buy a new home or refinance your current loan, contact Credible to speak to a home loan expert and get all of your questions answered.

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.