Experts were right that mortgage rates would reach 4 percent — it just happened a bit sooner than expected.
Most market experts predicted mortgage rates would hit 4 percent by the end of the year, but recent indices have shown rates as high as 4.12 percent.
Black Knight’s Optimal Blue rate indice recently reported average 30-year conforming rates at 4.07 percent.
The 30-year rate for FHA loans was at 4.12 percent.
One of Freddie Mac’s most recent mortgage rate surveys had 30-year fixed rates at 3.69 percent, while the Mortgage Bankers Association had 3.83 percent.
Experts say there are several ways to track mortgage rates, and multiple sources.
Freddie Mac is considered a top source, but experts say it occasionally can send mixed messages when there is rate volatility, which has been a common issue this year.
As a result, weekly rate surveys may not be as accurate as some daily rate indices, experts say.
However, since these rate indices are all averages, this means some lenders may be quoting rates anywhere from 3.6 percent to 4.4 percent.
MBA expert Joel Kan said rates could reach even higher this year.
Kan, the associate vice president of economic and industry forecasting, said that while current conditions could result in higher rates, this is subject to any unexpected economic news.
This news could be related to international affairs, commodity prices, or a new Covid variant.
Experts say bad economic news generally results in lower mortgage rates.
Current high rates have cut down on the number of refinance and purchase applications, although housing demand remains relatively strong.
Despite what appears to be tough news for the mortgage market, experts say cash-out refinancing and home equity lines of credit are two categories that aren’t as affected by higher mortgage rates.
Additionally, there still will be borrowers interested in refinancing while rates remain relatively low compared to past rate averages, experts say.
With a cash-out refinance, homeowners can replace their current mortgage with a new one that has a higher amount owed.
Borrowers then can take the difference in cash to pay down debts or other expenses and investments.
This became a more popular option for borrowers as home values reached record highs.
With a HELOC, homeowners can borrow money as needed, then make a minimum monthly payment during the repayment period.
Both options can be helpful ways to tap into home equity while the market continues to fluctuate, experts say.