Last week, rates saw a sharp increase after the Fed revealed that it would begin offloading its mortgage-backed securities earlier than expected. The 30-year fixed rate mortgage increased 24 basis points since last week to 3.59%. Meanwhile, the 15-year mortgage increased 15 basis points to 2.85%.
Mortgage rates saw mild recovery yesterday, but it’s still unclear whether they will stabilize over the next few days or continue increasing. Thanks to higher rates, credit requirements did loosen in December with the Mortgage Credit Availability Index (MCAI) increasing to 125.9. The last time credit was as accessible was in March 2020. However, the MCAI has yet to return to pre-pandemic levels when it was above 180. Also impacting the housing market is the price of lumber, which has been in short supply since spring of 2020 when sawmills cut production preemptively. Prices settled for a brief time, but are now skyrocketing once again. Overall, this lumber shortage has led the average single-family home to increase in price by $18,600 and rent for an apartment to go up $67 per month.