Top line

As mortgage rates have risen in recent times – alongside rising 10-year Treasury yields – most housing experts believe home sales will remain strong this year as rates remain low by historical standards and stocks remain tight.


Mortgage rates have risen in six of the past eight weeks, as the 30-year fixed-rate benchmark mortgage has risen above 3% to its highest level since September 2020, said the Mortgage Bankers Association.

Due to rising mortgage rates, overall refinancing activity (when the terms of an existing loan are revised) fell 11% last week to its lowest level since December 2020, but was still 50% higher. high than a year ago.

Average loan size of purchase requisitions hit record $ 418,000 last week – compared to $ 347,800 at the same time last year.

Bad weather in Texas led to a more than 40% drop in purchase and refinancing requests last week in Lone Star State.

Meanwhile, the 10-year Treasury yield (which correlates to the 30-year fixed mortgage rate) nearly tripled to 1.458% on Thursday, from a low of 0.515% in early August.

Key context

Joel Kan of the Mortgage Bankers Association (MBA) said rising mortgage rates – alongside rising Treasury yields – indicate that the market and the public are increasingly optimistic about the likelihood of an economic recovery. . Greg McBride, chief financial analyst at, notes that in 2020, when the economic outlook was poor and inflation was falling, Treasury yields and mortgage rates fell to record highs. Now that expectations of a post-pandemic economic surge are materializing, bond yields and mortgage rates are retracing some of last year’s decline. “The passage of President Biden’s $ 1.9 trillion stimulus package will likely add to this optimism, pushing mortgage rates higher,” Kan notes. However, Kan points out that mortgage rates, as measured by the 30-year fixed-rate mortgage benchmark, remain at historically low levels. “That rate fell below 3% for the first time in history last fall, and we’re still around 3% now,” he says. “Even if the rate climbs to 3.4% by the end of this year – as the MBA predicts – it will remain moderate by historical standards.” Indeed, for the context, the rate of the 30-year fixed-rate mortgage was on average around 4% between 2010 and 2020, underlines Kan. “In the 1980s, it was over 10%,” he adds. As such, Kan doesn’t think rising mortgage rates will hold back home sales this year, citing inventory levels remain tight enough. “However, rising mortgage rates could affect the timing of new purchases, as buyers might wait a little longer to see if rates ease somewhat,” he said. McBride cites that an improving economy is a “recipe” for strong home sales. “Whether the rates are 3%, 3.5% or even 4% matters less than whether potential buyers have confidence in their jobs, their income and their ability to make future mortgage payments,” he says. “Higher rates will slow home sales a bit, so the market might just be ‘sizzling’ instead of ‘hot’. “

What to watch out for

For now, MBA expects existing home sales to average around 6.4 million in each of this year’s four quarters (generally in line with sales recorded in the two quarters of 2020), while new home sales are expected to drop from 905,000 in the first quarter of this year to 979,000 in the fourth (above last year’s figures). McBride points out that the housing stock was “super tight” even before Covid and that demand exceeded supply “for a while”. “[It] just take [homebuilders] for a while to increase this production, ”he adds. But McBride also observes that a limited and continuous inventory can actually be a slight obstacle to home sales – despite still low mortgage rates, because “potential buyers are sidelined if they can’t find homes on the market. sell in their price range “. Indeed, according to the National Association of Real Estate Agents, the median price of homes in the United States was $ 303,900 in January, an increase of 14.1% from the previous year.


Maria Fregosi, director of investments at Homepoint Financial, a wholesale mortgage lender based in Ann Arbor, Mich., Says that while mortgage rates continue to climb, companies that retain their mortgage management rights [a contractual agreement where the right to service an existing mortgage is sold by the original mortgage lender to another party] can benefit from it. “Typically, the value of mortgage servicing assets increases as rates rise as fewer clients seek refinance,” she explains. Quicken Loans, Regions Mortgage, Huntington National Bank, TD Bank are among the largest mortgage services in the USA

Further reading

Mortgage rates are likely going up, so get 30 years (Forbes)

7 ways to get out of your mortgage (Forbes)