The rate on a 30-year fixed mortgage rose ever so slightly this week but is still below 3 percent, averaging 2.98, according to Freddie Mac.
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, though they have receded for much of this month.
In a separate survey of rates by Bankrate, the average 30-year rate fell, averaging 3.20 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.
“In light of the rising COVID caseloads globally, U.S. Treasury yields stopped moving up a month ago and have remained within a narrow range as the market digests incoming economic data,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The good news is that with rates under three percent, refinancing continues to be attractive for many borrowers who financed before 2020. But, for eager buyers, especially first-time homebuyers, inventory continues to be extremely tight and competition for available homes to purchase remains high.”
As Khater said, lower mortgage rates are great for refinancers, but the current market for prospective homebuyers is 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. The mortgage and real estate markets can be especially unforgiving for low-income and minority homeowners.
Where do mortgage rates go from here?
In the weeks and months ahead, the mortgage market may show some fluctuation, and the April downward trend is all but certain to reverse. 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 a majority predicting rates will go nowhere.
“Another week of little volatility ahead as rates hold steady,” said Gordon Miller, owner of Miller Lending Group in Cary, North Carolina. “With lenders caught up and now over-staffed, there may be an opportunity ahead for lower rates as margins will thin out.”