Historically low mortgage rates are fading fast. After hitting an all-time low in January 2021, mortgage rates have returned levels last seen in the early days of the pandemic. The average rate on 30-year mortgages climbed to 3.85 percent from 3.76 percent last week, according to Bankrate’s weekly survey of large lenders.

Why the sharp rise? The calculus behind mortgage rates is notoriously complicated, but here are four factors:

• The economy is booming: Employers added 467,000 jobs in January, and the unemployment rate is just 4 percent, the U.S. Bureau of Labor Statistics said last week.
• Inflation is raging: The annualized consumer price index jumped 7.5 percent in January, the highest rate of inflation since 1982, the Bureau of Labor Statistics said this week.
• The Federal Reserve is poised to act: The Fed has signaled that multiple hikes in interest rates are imminent, with the first likely in March. The Fed also is slowing the pace of its purchases of mortgage-backed securities, something that creates upward pressure on rates.
• The 10-year Treasury yield has risen sharply: This number is closely tied to 30-year mortgage rates, and the 10-year yield this week topped 2 percent for the first time since early 2019.

Sam Khater, chief economist at mortgage giant Freddie Mac, says “the normalization of the economy” is pushing mortgage rates up. “Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on homebuyer demand,” Khater says.