Depressed Treasury yields recently kept mortgage rates below 3%, but positive economic news could indicate larger increases will follow this week’s hike.
After three weeks of decline, the average 30-year fixed-rate mortgage fell to 2.98% 2.97% the week before in Freddie Mac’s latest primary mortgage market survey. The 30-year FRM was on average 3.23% this time a year ago. The government-sponsored company forecast the 30-year FRM to climb to 3.4% by the end of 2021 and 3.8% by the end of 2022 in its first-quarter forecast.
Chairman of the Federal Reserve Jerome Powell’s statement this week about the lack of immediate plans to raise interest rates or curb purchases of mortgage-backed securities put downward pressure on Treasury bond yields, likely generating the only modest change, Zillow economist Matthew Speakman said in a statement. However, this limited growth could be short-lived with anticipation of positive economic news to come.
âLooking ahead, with a slew of key economic reports on the horizon – including consumer spending and inflation data – the relatively subdued mortgage rate activity of the past two weeks could evolve into larger moves. important, âSpeakman said.
The 15-year average FRM also rose to 2.31%, down from 2.29% the week before, down from 2.77% a year ago. Meanwhile, only the 5-year Treasury-indexed variable rate mortgage fell significantly to an average of 2.64%, down from 2.83% a week earlier and down from 3.14% per year.
Despite low interest rates, which normally encourage borrowers to refinance and potential buyers, the origins remain in decline. The frenzied refinancing activity over the past 12 months could limit the growth of this type of loan, while the extremely low supply of housing creates fierce competition for fewer properties and discourages potential sellers who are worried about hanging up their next home.
âFor enthusiastic buyers, especially first-time home buyers, inventory continues to be extremely tight and competition for available accommodation purchasing remains high, âsaid Sam Khater, chief economist at Freddie Mac, in a press release.