Home Affordability Drops To 8-Year Lows As Mortgage Rates Surge

zerohedge.com / by Tyler Durden / Dec 22, 2016 2:46 PM

One week after Freddie Mac chief economist Sean Becketti warned that “if rates continue their upward trend, expect mortgage activity to be significantly subdued in 2017“, mortgage rates continued their upward trend. According to the latest update from the mortgage giant, the 30-year fixed reached 31-month highs, touching level not seen since April 2014 in the week after the Fed hiked its interest rate for the second time in the past decade.

The average rate for a 30-year fixed mortgage was 4.3%, up from 4.16% last week, Freddie Mac said in a statement Thursday. The average 15-year rate climbed to 3.52%, the highest since January 2014, from 3.37%.

Mortgage rates have surged since October, when the 30 Year fixed was offered at 3.40%, tracking a jump in Treasury yields on expectations of rising inflation.

Freddie Mac’s chief economist Becketti was more sanguine after last week’s unexpected warning, saying that “a week after the only rate hike of 2016, the mortgage industry digested the Fed’s decision. Following Yellen’s speech last Wednesday, the 10-year Treasury yield rose approximately 10 basis points. The 30-year mortgage rate rose 14 basis points to 4.30 percent, reaching highs we have not seen since April 2014.”

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