Inflation worries were the catalyst for the rise in mortgage rates this week. In recent weeks, building inflation pressures and concerns about economic growth have been playing tug-of-war with mortgage rates. In weeks when inflation trumps economic weakness, like this week, mortgage rates increase. When the focus shifts to the housing market, jobs, or anemic economic growth, mortgage rates fall. Rising oil prices have played a dual role by fueling higher inflation on both the headline and core levels while representing a drag on economic growth. Fixed mortgage rates are closely related to yields on long-term government bonds, and both are heavily influenced by the outlook for the economy and inflation.
Mortgage rates have been on a wild ride since the beginning of the year. The average 30-year fixed mortgage rate was as low as 5.57 percent in January, meaning that a $200,000 loan would have carried a monthly payment of $1,144.38. In February, the average 30-year fixed rate got as high as 6.41 percent, which meant the same $200,000 loan would have carried a monthly payment of $1,252.32. Today, with the average rate at 6.20 percent, a $200,000 loan would mean a monthly payment of $1,224.94.
