The rate on a 30-year fixed mortgage rose again in Freddie Mac’s survey this week. It averaged 3.17 percent, according to the mortgage giant — bringing the benchmark rate to its highest point since the beginning of June.
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 fell slightly, averaging 3.31 percent. The divergent trends highlight how unpredictable the mortgage market can be right now as the economy continues its uneven recovery from the COVID recession. 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 average is accompanied by an average of 0.8 of a point.
“During the course of the pandemic, ‘home’ has become more important than ever. As a result, strong purchase demand continues—but buyers also outnumber the sellers,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Since January, mortgage rates have increased half a percentage point from historic lows and home prices have risen, leaving potential homebuyers with less purchasing power. Unfortunately, this has disproportionately affected the low end of the market, where supply is the slimmest.”
If you’re one of those challenged buyers, there are some things you can do to boost your chances in this tight market, and it may help to understand why things have gotten so competitive in the first place.
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 in the wake of the latest updates from the Fed. Most expect they will either stay the same or fall.
“Unchanged,” said Jeff Lazerson, president of MortgageGrader. “After a significant rise in rates since the beginning of the year, rates are flatlining for now-which is wonderful.”