Although mortgage rates rose slightly this week, they’re still near record lows, averaging just above 3 percent on the benchmark 30-year mortgage.
The average cost of a 30-year fixed-rate mortgage rose to 3.05 percent from last week’s 2.97 percent average, according to Bankrate’s national survey of lenders. Rate for 30-year loans set a record low of 2.93 percent last month. This is the first time since last year that the 30-year mortgage rate has averaged above 3 percent.
Bankrate includes origination points and other fees in its figure. The 30-year fixed-rate loans in this week’s survey included an average total of 0.32 discount and origination points.
Mortgage rates have been in steady decline since the coronavirus recession struck in the spring of 2020, a trend that has helped drive the surprisingly strong housing market. The downward trend in mortgage rates reflects mixed signals from the economy. A recent rise coronavirus cases undermined hopeful signs that COVID-19 vaccines soon would curb the pandemic. The economic recovery so far has been uneven and incomplete.
Meanwhile, home prices have risen strongly during the pandemic, and record low mortgage rates have helped push rates higher. For homebuyers, and especially first-time buyers, rising prices pose an affordability challenge.
Mortgage rates are likely to trend slowly upward through 2021, but it may be years before they reach pre-pandemic levels.
“Rates will increase. It’s hard to ignore the ‘mountain’ or sharp trend of the 10-year Treasury causing many to frantically reprice and brace for impact,” Jennifer Kouchis, senior vice president of real estate lending at VyStar Credit Union in Jacksonville, Florida said in Bankrate’s weekly mortgage rate poll. “I have a feeling that this could get worse before it gets better, but I am not convinced that this is our final fate and we won’t see rates level back down in the weeks or months to come.”