Freddie Mac said the interest rate on a 30-year fixed-rate mortgage rose after three weeks of stagnation. In the mortgage giant’s weekly survey, it averaged 2.81 percent, the highest average since autumn 2020.
As the U.S. economy weakened due to the coronavirus pandemic, mortgage rates plummeted in 2020. Experts have long assumed that this trend would slowly reverse from 2021 onwards.
In a separate interest rate overview from Bankrate, the average 30-year rate also rose to an average of 3.05 percent. The gap with the Freddie Mac number is that Bankrate’s number includes points and issuance fees averaging 0.32 percent, while Freddie’s number excludes those costs. Freddie Mac said his average was accompanied by an average of 0.8 points.
“The 30-year fixed-rate mortgage this week hit its highest level since mid-November, averaging 2.81 percent,” Freddie Mac’s chief economist Sam Khater said in a statement. “Economic spending has improved on the recent stimulus, but congestion in the supply chain leads to downstream inflation, which leads to higher mortgage rates. While there are several temporary factors driving rates, underlying economic fundamentals suggest rates will remain in the low 3 percent for the year. “
Where do the prices go from here?
There may be some volatility in the mortgage market over the coming weeks and months, but these record-low rates are unlikely to last forever. Most industry watchers believe rates will continue this slow uptrend, although they still will stay very low by historical standards, possibly for years to come.
As a harbinger of the likely change, more than half of the mortgage experts surveyed by Bankrate said they expect rates to rise again next week.
“As expected, rates actually rose last week when the 10-year Treasury test yield was 1.25,” said Gordon Miller, owner of Miller Lending Group in Cary, North Carolina. “I look out for short-term rate hikes and then calm down. The hard part will be not to panic and overpay to chase a course from a week ago. “