The 30-year mortgage rate topped 4% last month for the first time since 2019, and is expected to go higher before the year’s over.

Experts point to three factors behind rising mortgage rates: a recovering economy, the Fed winding down the buying of mortgage-backed securities, and the highest inflation the country’s seen in 40 years.

Despite the economic uncertainty created by the conflict in Ukraine – which precipitated a drop in mortgage rates at the end of February – Federal Reserve Chair Pro Tempore Jerome Powell announced his support for a 25 basis-point rate hike. And while economists say the situation in Ukraine could reduce mortgage rates in the short term, longer-term inflation created by the conflict would likely push them higher.

“If the Fed thinks the biggest impact of this disruption will be more upward inflationary pressure, then they will presumably stay the course they laid out, perhaps even accelerate it a bit,” Jim Parrott, a senior economic advisor in the Obama administration, told Housingwire.

Experts are predicting four rate increases this year, starting when the Fed next meets this month.

What will rising mortgage rates mean for the housing market?

Higher rates mean we can expect a dip in refinance activity – and layoffs for lenders who hired more loan officers over the last two years to keep up with demand. In fact, in the first week of January, consumer-direct mortgage lender Wyndham Capital Mortgage let go 35 loan officers.

But they likely won’t have much of an effect on housing prices: growth will slow as the federal funds rate rises – but home prices are not going down anytime soon. “In December and January, for-sale inventory continued to be the lowest we have seen in a generation,” CoreLogic Chief Economist Frank Nothaft told CNBC. “Buyers have continued to bid prices up for the limited supply on the market.”

While rising mortgage rates aren’t great for many parts of the market, it’s helpful to remember that 4% was considered a good rate in 2019 – before the pandemic pushed the 30-year fixed rate to its all-time low of 2.93% (in January 2021).

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