Mortgage rates jump on economic optimism, vaccine news

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Good news for the U.S. economy, not-so-good news for borrowers: Mortgage rates rose this week, according to a Bankrate survey released Wednesday.

The average cost of a 30-year fixed-rate mortgage climbed to 3.12 percent from last week’s 3.04 percent in  Bankrate’s national survey of lenders. The 15-year fixed rose less sharply, increasing just 3 basis points from the previous week. 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 0.36 discount and origination points.

Mortgage rates have fallen steadily since the coronavirus recession began earlier this year, propping up a surprisingly strong housing market. However, stocks soared amid optimism about the presidential election, a potential vaccine for the coronavirus and an improving labor market.

Mortgage experts polled by Bankrate expect rates to rise in the coming week. Fully 92 percent expect an uptick, thanks in large part to hopeful signs that a COVID-19 inoculation soon will be available. The 10-year Treasury yield, a key indicator for mortgage rates, rose to its highest level in months, flirting with 1 percent Wednesday.

“The vaccine and better treatments give you a pathway to get the 10-year yield above 1 percent and higher in 2021 as the economy works its way back to normal,” says Logan Mohtashami, housing analyst at HousingWire. “Mortgage rates should follow, which is great for the United States of America.”

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Written by
Jeff Ostrowski
Senior mortgage reporter
Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.
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