After hitting record highs amid COVID-19, long-term U.S. mortgage rates are on the move; Showing signs of continued upward progression

As of the new year, mortgage rates reached their highest level since May 2020; however, although they remain very low, experts say the level of growth they are showing means that cheap money for home purchases should still be a reality for at least much of 2022. archive: ShutterStock.com, licensed.

DENVER, CO – At the worst of the COVID-19 pandemic, average long-term U.S. mortgage rates fell to historic lows – well below 3% at times – prompting many would-be homeowners to buy new homes due to incredibly cheap borrowing costs. However, all good things must eventually come to an end, and while mortgage rates are still well below pre-pandemic levels, they have nonetheless shown signs of a very slight increase.

As of the new year, mortgage rates reached their highest level since May 2020; however, even if they remain very low, experts say the level of growth they are showing means that cheap money for buying a home should still be a reality for at least a good part of 2022 .

On Thursday, mortgage buyer Freddie Mac reported that the average 30-year mortgage rate had risen to 3.22% from 3.11% just a week ago; in the same period a year earlier, that 30-year rate was a shockingly low 2.65%.

When it comes to 15-year fixed-rate mortgages — which many people use to refinance their current home loans — the average rate jumped only slightly, from 2.33% last week to 2.43% Thursday.

The Federal Reserve announced last month that it would begin to scale back its monthly bond purchases, which it did in an effort to drive down long-term rates; the reason for the drop in purchases was to combat the ever-increasing rates of inflation that have occurred. However, despite an anticipated three-rate hike expected to take place throughout 2022, the Federal Reserve’s benchmark rate would still hover below 1%.

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But in addition to the Fed’s lower monthly bond purchases, current mortgage rates will likely also be influenced by an economy still recovering from the damage caused by the COVID-19 pandemic; this would be on top of a significant number of jobs added to the market after several business closures over the past year led to rampant unemployment across the country.

While the number of Americans applying for unemployment benefits increased slightly last week – according to the US government, the number rose to 207,000, an increase of 7,000 – it was still at a level well below that reported during the worst of the pandemic, indicating that the domestic labor market continues to recover.

And despite the current surge in COVID-19 infections caused by the highly contagious – but milder in terms of symptoms – variant of Omicron, the number of recent job losses has not reached the level where previous variants of the virus were much more prevalent. .

Unlike when employers struggled to fill positions during a significant part of the pandemic, when many workers chose to stay home to continue collecting federal unemployment benefits rather than risk infection, these days, business owners are loath to fire anyone for fear of how difficult it will be to fill those positions again.

The US job market added 10.6 million openings in November 2021, the fifth highest amount since 2000. However, the impact of the so-called “Big Resignation” – a time during the pandemic when many people quit their jobs after a period of soul-searching in an effort to find more “satisfactory” labor – effectively pulled an additional 4.5 million workers from the market in November, adding to the intense need for new workers by employers during this period.

But since then the job market has rebounded and, although not yet reaching pre-pandemic employment levels – after government-mandated shutdowns and consumer uncertainty led to shutdowns widespread business, a 14.8% unemployment rate and lasting economic damage – it still shows signs of an upward trajectory that will eventually result in historically low mortgage rates that many have benefited from and which will begin to rise in the previous levels.

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