WASHINGTON–After a long period of record lows, mortgage rates have jumped above 4%, the first time since July 2015.
As of Nov. 18, the average rate on a 30-year, fixed-rate mortgage was 4.125%. That is more than 50 basis points higher than just prior to election day. Rates on 30-year fixed mortgages move in tandem with the 10-year Treasury yield, which was 2.34% on that same date, up from 1.88% just 10 days earlier.
An increase in rates is now leading forecasters to adjust what they expect in 2017. The Mortgage Bankers Association, for instance, said it is now expecting total lending volume of $1.58 trillion for next year, down 3% from its previous projection. The decline is entirely driven by a lower projection for refinance volume in 2017, the MBA said.
While current rates are low versus the historical average, the increase is still a problem. The MBA also reported that demand for mortgage has slowed. Applications for purchase and refinance mortgages fell 9.2% for the week ended Nov. 11 compared with a week earlier, according to the MBA.