Mortgage Rates At Highest Level in Nearly Three Years

Mortgage rates increased last week, reaching their highest levels in nearly three years.

Economic data pointed to continuing inflation pressures and tight labor markets. With new supply chain disruptions and higher energy prices, investors are concerned that further inflationary stress may result in additional increases in interest rates. Downward pressure on mortgage rates caused by last week’s “flight to quality” by investors seeking less risky assets was overpowered by market expectations regarding what the Federal Reserve will do to fight inflation. Although the Federal Open Market Committee (FOMC) decision today to raise the target Federal Funds rate was largely in line with expectations, rates have continued to increase this week. Markets will monitor the Federal Reserve and future economic data releases for any signals of whether the economy will withstand rate increases and continue to grow.

Geopolitical developments could also influence rates in the near term based on the potential impacts to prices, supplies and global economic activity.