Experts: Lock in mortgage rate now

It is time to refinance while they are still low

When the Federal Reserve indicated in December that it would be raising short- term interest rates to slow inflation – which had reached four- decade highs – it prompted a steady rise in mortgage rates.

Between the Fed announcement in December and its approval of a onequarter percentage- point hike on Wednesday, mortgage rates for a 30year fixed loan rose to almost 4% in early March from 3.3%.

Then on Thursday, the 30- year fixed- rate mortgage topped 4% for the first time since May of 2019, according to Freddie Mac. And it likely will rise further as the Fed is projecting six more rate hikes this year.

The 30- year fixed- rate mortgage averaged 4.2% for the week ending March 17, up from the previous week when it averaged 3.85%. A year earlier, the 30- year rate averaged 3.1%

For homeowners looking to refinance, there is no time like the present, experts say.

Is it smart to refinance right now?

“While the next few weeks will be unpredictable as markets continue to churn, the outlook is for mortgage rates to rise even higher,” says Nadia Evangelou, senior economist and director of forecasting for the National Association of Realtors. “And my advice is to lock in a rate right now if they ( homeowners) feel financially secure.”

Potential borrowers should keep in mind that mortgage rates remain historically low, she added.

Among homeowners who’ve had a mortgage since before the pandemic, 74% have not refinanced, according to an October Bankrate survey.

“If you haven’t had the chance to refi at this point in time now, this is sort of like your last chance to do it at these types of rates,” says Lindsey Bell, the chief markets and money strategist for

Ally, a financial services firm.

The higher mortgage rates also are likely to further diminish the purchasing power of first- time homebuyers who are already contending with a small pool of available homes and double- digit price increases.

Nationally, home prices increased 19% year over year in January, according to CoreLogic. And since the beginning of the year, nearly 6.3 million households have been priced out, two million of whom are millennials households, says Evangelou.

The war in Ukraine adds an element of uncertainty to the market which could have an impact on mortgage rates, says Evangelou.

“Uncertainty typically makes investors move from stocks into the safety of bonds, pushing down Treasury yields and mortgage rates,” she says. “In addition, the spread of a new COVID- 19 variant could also slow down the economy and keep mortgage rates low.”

Would the higher mortgage rates bring down home prices?

The housing market will continue to remain competitive due to low existing inventory, according to Sam Khater, Freddie Mac’s chief economist. He expects the spring homebuying season to be marked by high prices.

It generally takes time for mortgage rates to affect prices, says Daryl Fairweather, the chief economist at Redfin.

“We would expect to see the impact on prices in about three months,” Fairweather says. “Prices likely won’t go down, but they could likely stagnate.”

CHARLES KRUPA/ AP Among homeowners who’ve had a mortgage since before the pandemic, 74% have not refinanced, according to an October Bankrate survey.