The latest figures from Freddie Mac show that rates for a 30-year fixed-rate loan are now at an average of 4.375 percent. Since Donald Trump was elected the next president on November 8, mortgage rates have surged. Many investors have urged rates to increase in the belief that Trump's new administration will drive economic inflation and growth, thanks to tax cuts and increased spending on infrastructure.
The mortgage rate increases have been further fueled by the Federal Reserve, which boosted short-term interest rates on December 14 for the second time in the last decade. The chief economist at Freddie Mac, Sean Becketti, said, "The mortgage industry digested the Fed's decision, and this week's survey reflects that response."
Rates for other loan terms have also risen. For example, the average rate on a 15-year fixed-rate mortgage is now 3.5 percent, rising from 3.37 percent. Adjustable-rate 5-year mortgages have also seen an increase, with 3.19 percent surging to 3.5 percent - the highest point since the middle of 2011.
There is concern that an increased number of consumers will be priced out of the market. This is due to low inventory levels driving bids higher and potential buyers no longer being able to afford loans due to the higher interest rates. The National Association of Realtors said that November's sale levels were 9 percent down from 2015, with less than 1.9 million homes on offer.
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