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Dream time
Mortgage rates hit another historic low this week, according to Freddie Mac – but don’t expect ultra-low rates to last forever.
The average 30-year fixed mortgage rate was 2.65% in the week ended January 7, 2021, a further low, according to the company’s weekly survey of mortgage rates. In a statement, Sam Khater, the company’s chief economist, said the recent low rates were offset by rising house prices, challenging the accessibility of homes.
Affordability of homes became a concern in the second half of 2020, when economists warned that the rapid rise in prices was making it more difficult for some buyers to enter the market, even amid historically low mortgage rates. High buyer demand, probably driven in part by changes caused by the pandemic, as well as historically low interest rates and demographic changes, and a low supply of homes for sale contributed to prices that rose at the fastest pace in years in October. the last month for which the Case-Shiller index data is available.
But more pressure on home prices may come with rising mortgage rates, Khater wrote in the statement. The economist said he expects rates to rise modestly over 2021, as the economy recovers from the Covid-19 pandemic and vaccines start to take effect, Khater wrote in an email to Barron’s. Although Khater noted that the increase in rates depends on the distribution of the vaccine, he said the rates are likely to increase slowly, with the biggest increase in the second half of the year.
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