WASHINGTON (AP) — Average long-term U.S. mortgage rates continued to rise this week. The benchmark 30-year loan rate crossed the 3.5% mark.

Home loan rates have run in recent weeks at levels not seen since early 2020, when the coronavirus pandemic broke out in the United States. However, they remain at historically low levels.

Mortgage buyer Freddie Mac reported on Thursday that the average rate on the 30-year loan rose to 3.56% from 3.45% last week. On the other hand, it stood at 2.77% a year ago.

The average rate on 15-year fixed-rate mortgages, popular among those refinancing their homes, jumped to 2.79% from 2.62% last week.

Mortgage rates are set to rise this year after the Federal Reserve announced last month that it would start scaling back its monthly bond purchases – which are aimed at lowering long-term rates – to slow the acceleration of inflation. . But even with the three or four rate hikes expected in 2022, the Fed’s key rate would remain historically low around 1%.

Last week, the government announced that inflation had risen to 7% in December from a year earlier, the biggest such increase in four decades. Additionally, the Labor Department reported that prices at the wholesale level rose a record 9.7% last month from December 2020.

In addition to soaring inflation, experts expect robust economic growth and a tight labor market to continue pushing rates higher.

Freddie Mac economists expect higher mortgage rates to lead to a slight drop in buying demand ahead of the spring home-buying season. They note that the supply of homes available for sale remains tight and prices are still high.

Available homes have been scarce since well before the pandemic began, and prices have risen nearly 20% over the past year. Higher mortgage rates could make it even harder for homebuyers to secure a new home.

New data released on Thursday showed that sales of previously occupied homes fell in December for the first time in four months, as many potential buyers were frustrated by the lack of available homes – which fell to the lowest level in addition two decades.

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