Mortgage payments are already less affordable relative to income than at any time since 2008

WASHINGTON­–While still low by traditional standards, mortgage rates have now risen for three straight weeks.

The rate increases are partly in response to expectations the Federal Reserve will raise interest rates at least three times during 2021, as rates are closely tied to the 10-year Treasury.

As of Jan. 13, the average rate on a 30-year, fixed-rate mortgage was 3.871%, while it was 3.592% on a 30-year fixed FHA mortgage and 3.632% on a 30-year fixed VA loan.

A year ago, the average rate on the 30-year was 2.79%, just above its record low of 2.65%.

Meanwhile, the higher borrowing costs combined with record-high home prices could push some would-be buyers out of the market. According to the National Association of Realtors, the median price for existing homes rose 13.9% in November from a year earlier to $353,900.

“Given the fast pace of home price growth, [higher rates] will likely dampen demand in the near future,” Sam Khater, chief economist at Freddie Mac, said in a statement.

In addition, the Federal Reserve Bank of Atlanta said mortgage payments are already less affordable relative to income than at any time since 2008. Early 2021, Americans needed about 29% of their income to cover a mortgage payment on a median-priced home, the Atlanta Fed estimated. That rose to 33% by October.