Mortgage rates continue to rise, compounding an affordability crunch that has squeezed many Americans’ wallets. Now, soaring rates are prompting some home buyers to roll the dice that they will fall in a few years. The average 30-year, fixed-rate mortgage rose to 7.28 percent this week, up from 7.03 percent last week and the highest since November 2023, Freddie Mac said Thursday.
“Mortgage rates jumped to their highest level in almost three years, pushing borrowers to the sidelines,” said Joel Kan, deputy chief economist at the Mortgage Bankers Association. Rates had fallen below 6 percent in late February, but began to climb after the United States and Israel attacked Iran on Feb. 28. The war has driven up energy costs, stoking inflation fears.
Adjustable-rate mortgages can be significantly lower than fixed-rate counterparts, sometimes as much as a full percentage point, saving buyers thousands annually. ARMs also carry risk if rates continue to climb. The Mortgage Bankers Association reported ARM applications rose to 10.3 percent of overall mortgage applications, the highest in a year.
“The wider the gap between ARM rates and the fixed rates, the stronger the incentive to choose an ARM,” said Archana Pradhan, principal economist at Cotality. ARMs offer savings but introduce market volatility. Borrowers need a plan for after the introductory period, said Nick Rocco, a mortgage loan officer in the Baltimore area.
Source: New York Times Top Stories · Summarized by HeadlinesBriefing