As the economy continues to strengthen, mortgage rates are heading upwards. The 30-year fixed-rate mortgage increased from its 2.94% average last week to 3% this week, Freddie Mac reports.
“Mortgage rates are more likely to continue to rise than fall throughout the rest of 2021,” Nadia Evangelou, National Association of REALTORS® senior economist and director of forecasting, writes on the association’s Economists’ Outlook blog. “The economy is growing faster than expected as Americans get vaccinated against COVID-19 and resume traveling, going to restaurants, bars, events, and shows.”
Despite the uptick, mortgage rates remain historically low, averaging 3%, down from 3.24% a year earlier. Home buyers are unlocking greater savings. For example, in 2008, mortgage rates averaged more than 6%. But when a rate is 3% lower than that, as it is this week, it decreases monthly payments by $525 for the typical home buyer, Evangelou says.
However, higher home prices are offsetting those lower rates. Home prices are significantly higher than they were in 2008.
Freddie Mac reports the following national averages with mortgage rates for the week ending May 20:
- 30-year fixed-rate mortgages: averaged 3%, with an average 0.6 point, rising from last week’s 2.94% average. Last year at this time, 30-year rates averaged 3.24%.
- 15-year fixed-rate mortgages: averaged 2.29%, with an average 0.7 point, increasing from last week’s 2.26% average. A year ago, 15-year rates averaged 2.70%.
- 5-year hybrid adjustable-rate mortgages: averaged 2.59%, with an average 0.3 point, unchanged from last week’s average. A year ago, 5-year ARMs averaged 3.17%.
Freddie Mac reports average commitment rates along with points to better reflect the total upfront cost of obtaining a mortgage.