The average rate on the 30-year fixed mortgage hit 3.33% last week and is now about half a percentage point higher than a year ago.

The economic damage from the omicron variant of the coronavirus is now expected to be less than initially thought, and that has interest rates back on their upward trajectory yet again. As a result, mortgage demand fell 2.7% to end 2021, compared with two weeks before, according to the Mortgage Bankers Association’s seasonally adjusted index. [The MBA did not release application volume last week due to the holidays.]

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.33% at the end of last week from 3.27% two weeks before, with points rising to 0.48 from 0.38 (including the origination fee) for loans with a 20% down payment. That rate was 47 basis points lower the same week one year ago.