30 Year Fixed Rate Mortgage Hit Lowest Rate Every
Since July Freddie Mac's weekly measures have remained under 3%, hitting 2.66% last month (the average rate has since climbed up to 2.79% as of January 14).
Rates are expected to float in the 2% range for a few more months, however, according to Realtor.com's chief economist Danielle Hale and New York-based executive mortgage banker Melissa Cohn.
The average 30-year fixed rate is expected to land somewhere between 3.2% to 3.4% by the end of 2021. The chief economist at Realtor.com, Danielle Hale, told Insider that she predicts the Freddie Mac 30-year fixed rate will break the 3% threshold in late spring.
"We expect that this year, the housing market will have a very different spring season than last year — which is probably a huge understatement," she said.
Buyer appetite for single-family homes has skyrocketed with the pandemic boosting demand for more square footage and outdoor space. Macroeconomic factors, like the expected stimulus from the Democratic government, could also add upward pressure to rates.
"We have Biden, we have a Democrat-led senate, and that means economic stimulus which means inflation and higher interest rates," Melissa Cohn, an executive mortgage banker at William Raveis Mortgage said (Cohn agrees with Hale that the 30-year fixed rate will likely break the 3% threshold in the springtime).
The day following the Democrats' flip of the Senate earlier this month, the 10-year Treasury yield climbed above 1% for the first time since March and the average 30-year fixed mortgage rate climbed to 2.86%, Yahoo Finance reported.
"There is a mixed bag of expectations as to how much higher rates will go this year. Some pundits expect the 10-year bond yield to rise to 2% by the end of the year, and others expect it to cap at around 1.50%. Either way, we can expect mortgage rates to breach the 3% mark at some point this spring," Cohn wrote in her recent newsletter. "To put that in perspective, mortgage rates averaged 3.625% in January of 2020 — and at that time, we thought that was a great deal!"