Buyers Feeling Rate Pressures

With mortgage rates now at 3.17%, many buyers are rushing to get ahead of further increases.

© Kheng Guan Toh – AdobeStock

Home buyers may feel even more of a rush to lock in mortgage rates trying to get ahead of any further increases. Over the last month, the 30-year fixed-rate mortgage has moved above its sub-3% ultra-low averages to jumping this week to a 3.17% average.

“During the course of the pandemic, ‘home’ has become more important than ever,” says Sam Khater, Freddie Mac’s chief economist. “As a result, strong purchase demand continues—but buyers also outnumber the sellers. Since January, mortgage rates have increased half a percentage point from historic lows and home prices have risen, leaving potential homebuyers with less purchasing power. Unfortunately, this has disproportionately affected the low end of the market, where supply is the slimmest.”

Despite this week’s increase, rates still remain lower than a year earlier—when the pandemic had first hit the country. Also, expect mortgage rates to remain low near 3.3% in 2021, Nadia Evangelou, senior economist and director of forecasting at the National Association of REALTORS®, writes for the association’s Economists’ Outlook blog.

Freddie Mac reports the following national averages with mortgage rates for the week ending March 25:

  • 30-year fixed-rate mortgages: averaged 3.17%, with an average 0.6 point, rising from last week’s 3.09% average. A year ago, 30-year rates averaged 3.50%.
  • 15-year fixed-rate mortgages: averaged 2.45%, with an average 0.6 point, increasing from last week’s 2.40% average. Last year at this time, 15-year rates averaged 2.92%.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.84%, with an average 0.2 point, increasing from last week’s 2.79% average. A year ago, 5-year ARMs averaged 3.34%.

Freddie Mac reports commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage.

Source: Freddie Mac and “Instant Reaction: Mortgage Rates, March 25, 2021,” National Association of REALTORS® Economists’ Outlook blog (March 25, 2021)