The rate on a 30-year fixed mortgage rose as little as possible in Freddie Mac’s survey this week — just 1 basis point to an average of 3.18 percent, according to the mortgage giant. That puts the benchmark rate on par with where it was in the first week of June 2020.
With the U.S. economy sagging because of the coronavirus pandemic, mortgage rates plunged in 2020. Experts have long anticipated that this trend would reverse in 2021.
In a separate survey of rates by Bankrate, the average 30-year rate also rose, averaging 3.33 percent. The gap with Freddie Mac’s number is because Bankrate’s figure includes points and origination fees averaging 0.32 percent, while Freddie’s number excludes those costs. Freddie Mac said its rate is accompanied by an average of 0.8 of a point.
“Although mortgage rates remain low, we are beginning to see a pullback by those looking to enter the housing market,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “In fact, homebuyer demand has gone from 25 percent above pre-COVID levels at the start of the year, when mortgage rates hit record lows, to 8 percent above pre-COVID levels today.”
Even so, the spring homebuying season promises to be busy with competition high among those buyers who are still in the market. Relatively low mortgage rates coupled with limited housing supply are the main drivers of the current market.
Where do rates go from here?
In the weeks and months ahead, the mortgage market may show some fluctuation, but this upward trend is likely to stay in place. However, most industry watchers think rates will remain very low by historical standards, possibly for years to come, even as they continue to inch higher.
Meanwhile, mortgage experts polled by Bankrate are divided over where rates will head next week, though the largest share expect another rise.
“After briefly stabilizing, the improved tone of economic data from the month of March and talk of an infrastructure spending bill are renewing the push higher in bond yields and mortgage rates,” said Greg McBride, Bankrate’s chief financial analyst.