The average U.S. mortgage rate for a 30-year fixed-rate loan fell one basis point this week to 2.66% – the lowest rate in the Freddie macThe primary mortgage market survey of nearly 50 years of history. This week’s mortgage rate broke the previous record set on December 17th.
With this week’s record drop, there are now 20 consecutive weeks when average mortgage rates were below 3%, and the 16th time this year, rates broke their own record.
The average fixed rate for a 15-year mortgage also fell last week to 2.19% from 2.21%.
“The housing market is about to end the year strong as low mortgage rates continue to fuel homebuyer demand and refinancing activity,” said Sam Khater, chief economist at Freddie Mac. “In 2021, we expect rates to remain stable, but the main driver in the near term will be the trajectory of the COVID-19 pandemic and the execution of the vaccine.”
During a tumultuous year, months of record interest rates made housing a positive for the economy. According to The first Americans Potential model for selling houses, historically low rates significantly fueled the real estate rebound from April to October.
With only a week of mortgage rates to report in 2020, economists and organizations have weighed in on what they expect the 2021 rate landscape to look like.
Mark Fleming, chief economist at First American, estimates mortgage rates in 2021 will vary from 2.8% to 3.3% and increase the purchasing power of homes while maintaining robust purchase demand.
Early December, Mortgage Bankers Association Senior Vice President and Chief Economist Mike Fratantoni said fiscal policy will play an important role in determining the direction of interest rates in 2021.
Following the publication of the Fed’s intention to maintain short-term rate at zero for the foreseeable futureFratantoni said the MBA fully expects the Fed to keep interest rates low at zero for years to come.
Frank Nothaft, Chief Economist at CoreLogic, expects initial rates on ARMs to remain low and 30-year fixed rate loans will likely remain below 3% in early 2021 and on average about 3.1% over the next two years.
According to Nothaft, these low rates will provide a great opportunity for families with good credit to buy or refinance homes and estimates that there will be around 20 million home loans outstanding at the start of 2021, with an interest rate contract of 4% or more. .
Although the rates have already broken Fannie Mae Economic and strategic group 2.7% dip – the GSE predicts that if economic growth starts to accelerate, it is possible that inflation expectations will also rise substantially, causing interest rates to rise sharply in the longer term.