Rising rates say good things about the U.S. economy, but it’s not great news for homebuyers. Still, most experts predict something a bit above 3% for most of 2021.
MCLEAN, Va. – In 2020, a weak economy that kept getting weaker sparked a series of record-low mortgage rates announcements in Freddie Mac’s weakly survey – but the trend has reversed over the past few weeks.
In this week’s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 2.97%. It’s a notable increase from last week’s 2.81%, which was itself a notable increase from the week before that.
“Optimism continues as the economy slowly regains its footing, thus affecting mortgage rates,” says Sam Khater, Freddie Mac’s chief economist. “Though rates continue to rise, they remain near historic lows.”
“The poor economic outlook in 2020 brought mortgage rates to record lows,” Greg McBride, chief financial analyst for Bankrate.com, said in a CNN interview. “Now that the economic skies are looking brighter, mortgage rates are retracing last year’s decline when they fell to previously unseen lows.”
One year ago, the average 30-year, fixed-rate mortgage averaged 3.45%, which is still considered excellent by historical standards. While it’s possible that the days of new record-low mortgage rates has passed – though nothing is ever certain – even a half-percent increase would keep overall rates in the low range.
Still, every mortgage rate increase affects homebuyers who based a home purchase on the amount they’ll have to pay on the mortgage each month.
“When combined with demand-fueled rising home prices and low inventory, these rising rates limit how competitive a potential homebuyer can be, and how much house they are able to purchase,” says Khater.
Mortgage numbers
- The 30-year fixed-rate mortgage averaged 2.97% with an average 0.6 point for the week, up from last week’s 2.81%. A year ago, the 30-year FRM averaged 3.45%.
- The 15-year fixed-rate mortgage averaged 2.34% with an average 0.6 point, up from last week’s 2.21%. A year ago, the 15-year FRM averaged 2.95%.
- The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.99% with an average 0.1 point, up from last week’s 2.77%. A year ago, the 5-year ARM averaged 3.20%.
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