Omicron Variant Keeps Mortgage Rates Stable For Third Straight Week

Mortgage rates held steady for another week as economic growth slowed in January, according to Freddie Mac. (iStock)

The omicron variant of COVID-19 kept mortgage rates stable for the third consecutive week as economic growth faltered in January, according to the latest data by Freddie Mac.

The 30-year fixed-rate mortgage was unchanged from last week, standing at 3.55% annual percentage rate (APR) for the week ending February 3. This is up from the same period last year when it reached 2.73%.

“The economy lost some momentum in January, leaving mortgage rates unchanged from last week and relatively flat for the third week in a row,” 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.”

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Mortgage rates are expected to rise in the coming weeks

Another type of mortgage saw a slight decline this week. The 15-year mortgage rate fell to 2.77% from 2.8% previously Last week and up from 2.21% last year. Meanwhile, the five-year Treasury-indexed hybrid variable-rate mortgage (ARM) edged up to 2.71%, from 2.7% last week but from 2.78% last year.

“As the economic recovery continues through the spring and summer, mortgage rates should resume their upward trajectory,” Khater said. “Meanwhile, recent data suggests that demand from home buyers continues to be strong while supply remains weak, driving home prices higher.”

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Rising rates prompt buyers to act

Despite the recent rate hike, demand from homebuyers is not weakening, an expert has said. This pushes up house prices even further and reduces affordability for borrowers.

“Housing data so far has indicated that rising mortgage rates are creating a sense of urgency, rather than deterring potential buyers, and prices continue to rise as the few homes available for sale snapping up fast,” said Danielle Hale, chief economist at noted. “These conditions can be particularly difficult for first-time home buyers already struggling with rising rents that make it difficult to save for a down payment.”

Although rates have been on a steady upward trend lately, this is likely just the beginning as the Federal Reserve prepares to raise rates in March.

“Last week’s Fed meeting confirmed that interest rates will continue to rise, with Fed rate hikes likely to begin as early as March,” Hale said. “However, the Fed’s statement only confirmed what investors were already expecting, that these rate hikes are warranted to bring ongoing inflation under control.”

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

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