Mortgage Rates Still on the Rise: Even Higher Rates Expected
Mortgage rates have continued to climb for the fifth week in a row, resulting in a nine-month high.
The latest data released by Freddie Mac on the 18th of March shows that the average 30-year fixed-rate mortgage has jumped to 3.09%, the highest it has been since June of 2020. The 15-year fixed-rate mortgage followed suit at 2.40%. The 30-year rate was at 3.05% the week before, and it started 2021 at 2.65%. The 15-year rate started the year at 2.16% and was at 2.38% the week earlier.
“As expected, mortgage rates continued to inch up but are still hovering around 3%, keeping interested buyers in the market,” according to Sam Khater, a chief economist at Freddie Mac.
While the rates for mortgages and refinancing have increased, they are still at historic lows. This has resulted in fixed-rate mortgages offering better value than adjustable-rate mortgages, which may see further increases as the economy recovers from the effects of the COVID-19 pandemic.
Experts expect rates to rise throughout the year due to the expected economic recovery and stabilizing actions taken by the Federal Reserve.
Even though the Federal Reserve doesn’t adjust mortgage rates, the policies it enacts may influence them. The Federal Reserve has been buying bonds during the pandemic, and it has consistently spent $120 billion per month, which has had a stabilizing impact on mortgage rates.
“Economic signs are pointing toward a post-pandemic return to normality, a welcome development as spring approaches. While we expect rates to remain favorable, especially in light of historical trends, the upward move is capping many buyers’ budgets and trimming their ability to qualify for more expensive homes,” George Ratiu, senior economist at Move, Inc, said.
With record-low interest rates, 2020 saw a significant increase in mortgages and refinancing. Mortgages in the US amounted to $4.3 trillion, with $2.8 trillion consisting of refinancing. This is an all-time record according to a report from Black Knight, a mortgage monitoring company. However, between February and March, the number of homeowners for whom refinancing would be a sensible option fell from 18 million to 12.9 million.