Mortgage rates start 2021 with a new low record

Mortgage rates start 2021 with a new low record

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The average interest rate on a 30-year fixed-rate mortgage has dropped to 2.65%, according to Freddie Mac. This is the lowest level in almost 50 years that the mortgage giant publishes the survey. The 15-year fixed rate mortgage dropped to 2.16%.

Current rates are almost one percentage point lower than a year ago, when the 30-year fixed rate averaged 3.64% and the 15-year fixed rate was 3.07%.

While low rates brought domestic buyers to the market, high demand and low inventory increased prices.

“Despite the decline of a total percentage point in rates last year, housing affordability has declined because these low rates have been offset by rising house prices,” said Sam Khater, chief economist at Freddie Mac.

He added, however, that the forces behind the drop in rates have changed in recent months and rates are expected to rise modestly this year.

“The combination of rising mortgage rates and rising home prices will accelerate the decline in accessibility and further tighten potential buyers during the spring home sales season,” said Khater.

For now, however, this means that buyers can still take advantage of low rates to offset the sharp increases in home prices that have occurred in many parts of the U.S. last year, said Danielle Hale, chief economist at Realtor.com.

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“But finding a home will continue to be a challenge,” she said. In December, the average listing price rose 13.4% over the previous year, while the number of homes for sale dropped to less than 700,000 for the first time, according to Realtor.com.

“The future outlook for mortgage rates is likely to be higher thanks to the changing landscape in Washington,” said Hale.

On Wednesday, the 10-year Treasury rose above 1% for the first time since March, as the result of the race for the Georgia Senate seemed to indicate the possibility of fewer crashes in the federal government, she said.

“However, that does not exclude the possibility of another record low in the short term,” said Hale.

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