The rate on a 30-year fixed mortgage fell nine basis points in Freddie Mac’s survey this week, settling at an average of 3.04 percent, according to the mortgage giant.
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 as the economy rebounds, and for the most part, rates have been heading upward this year.
In a separate survey of rates by Bankrate, the average 30-year rate also fell, averaging 3.27 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.
“Mortgage rates took another dip this week as the 30-year fixed-rate mortgage decreased by almost ten basis points, week over week,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The economy is improving on the demand side and on the supply side, a variety of goods and materials remain scarce. As a result of this imbalance, pricing pressures are building and causing inflation to rise. Despite the pause in mortgage rates recently, we expect them to increase modestly for the remainder of this year.”
While lower mortgage rates are certainly a net good for refinancers, the current market for prospective homebuyers is a little more mixed. Low mortgage rates remain a favorable factor, but limited housing supply coupled with more borrowing power is pushing prices up and increasing competition significantly in most locations.
Where do mortgage rates go from here?
In the weeks and months ahead, the mortgage market may show some fluctuation, rates are likely to continue trending upward overall. 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 expect this lower rate reprieve to continue next week, with most predicting rates will go nowhere.
“We’ve seen a nice little rally in mortgage rates over the last week. Perhaps bond markets are beginning to think the rise in inflation and inflation expectations are more transitory than permanent,” said Michael Becker, branch manage at Sierra Pacific Mortgage in White Marsh, Maryland. “Mortgage rates will be flat in the coming week.”