The mortgage rate is close to the lowest level in 2020. However, those who wish to lock in such cheap financing should not wait too long on the sidelines.
In the week ending December 31, the average interest rate on 30-year fixed-rate mortgages was 2.67%, which was a basis point higher than the record low of 2.66% set last week.
Reported on Thursday.
At the same time, 15-year fixed-rate mortgages fell by two basis points to an average of 2.17%, which is a record low for this mortgage product. The 5-year U.S. Treasury bond index hybrid variable rate mortgage fell by 8 basis points to 2.71
George Ratiu, senior economist at Realtor.com, said: “As the year 2020 ends, we can look back at the year when low mortgage interest rates became a powerful driver to promote activities and provide homes for buyers.”
According to a weekly report by Freddie Mac, mortgage interest rates this year have fallen to record lows on more than a dozen different occasions. Indeed, interest rates have fallen to levels that were once considered infeasible or impossible.
However, many factors may push up interest rates during the new year. “Compared with the passing of the newly passed COVID-19 relief bill, the market has been looking forward to it for several months. In contrast, the results of two runoff elections for the Senate in Georgia and the possibility of more fiscal relief are not in the eyes of investors. Much more certain. Zillow ZG economist Matthew Speakman said, “As a result, bond yields may fluctuate sharply based on their results. ”
Mortgage rates roughly track the direction of long-term bond yields, especially 10-year US Treasury bonds. Speakman added: “In any of the above two areas, unless people know more, meaningful changes in mortgage interest rates seem unlikely.”
In the long run, the trajectory of the pandemic and the economy will have a significant impact on interest rates. With the introduction of vaccines, the global community seems ready to escape from the pandemic. If this benefits the US economy as expected, interest rates will certainly rise.
Accordingly, most economists expect to raise interest rates in 2021, despite how much they will raise interest rates.
Regardless of the amount, rising mortgage interest rates may make it impossible for people to afford home purchases while housing prices rise to record levels. Latiu said: “We expect that rising mortgage rates will challenge first-time home buyers as inventories have fallen to new lows and prices continue to climb, and they are still struggling to find affordable housing.”