The economy, the Fed and inflation all have some influence over long-term fixed mortgage rates, which generally are pegged to yields on U.S. Treasury notes, so there’s already been a spike since since the Fed started raising rates.
The average 30-year fixed-rate is now about 4.7 percent, up from 4.09 percent in 2015. That has cost the average homebuyer roughly $42,000, WalletHub found.
Many homeowners with adjustable-rate mortgages or home equity lines of credit, which are pegged to the prime rate, will also be affected. While some ARMs reset annually, a HELOC could adjust within 60 days.
What you can do about it: Those with an ARM can still refinance into a fixed rate that’s lower than what your ARM will adjust to later this year, said Tendayi Kapfidze, chief economist at LendingTree. “My expectation is that we are in an upward trend so sooner is better than later.”
“If the fed funds rate continues to go up, there’s no guarantee these rates will be available to you down the line,” he added.
If you have a HELOC, ask your lender to freeze the interest rate on your outstanding balance or consider refinancing into a fixed-rate home equity loan, although that puts a cap on how much money you can access.