This increase is largely due to the increasing yield on the 10-year Treasury Note, upon which mortgage rate trends are largely based. The average 30-year fixed-rate mortgage has gone from 2.88% to 3.06% as of October 5th, 2020, according to Freddie Mac. Similarly, the 15-year fixed-rate mortgage has increased from 2.39% to 2.50% over the same time period.
The Federal Reserve has kept interest rates low for the past few months in an effort to combat the economic downturn caused by the COVID-19 pandemic. However, these efforts appear to be having a limited effect, as mortgage rates continue to climb. In addition, the Mortgage Bankers Association reports that mortgage applications fell by 11.9% last week, a further indication that the current economic situation is having an adverse effect on the housing market.
Despite the recent rise in mortgage rates, the current levels remain historically low. While the increase may put some homeowners and potential homebuyers off, it is still far lower than the national average of 3.77% from a year ago. In addition, the current rates remain competitive with those of other countries, meaning that homebuyers can still enjoy considerable savings compared to past periods.
In light of the current circumstances, it is important to note that these rates are still incredibly low and should not deter potential buyers from making a purchase. With the current rate still well below the national average, there is likely to be some significant savings to be had when it comes to purchasing a house. As such, it would be prudent for buyers to review their options now and seriously consider taking advantage of the current climate.
Analysis:
This article discusses recent trends in the U.S. mortgage market, where mortgage rates have risen steadily since September 28th, 2020 largely due to increasing yields on the 10-year Treasury Note, upon which mortgage rate trends are based. Specifically, the 30-year fixed-rate mortgage has risen from 2.88% to 3.06%, while the 15-year fixed-rate mortgage has increased from 2.39% to 2.50% as of October 5th, 2020.
The Federal Reserve has kept interest rates low in order to stimulate the economy during the COVID-19 pandemic; however, these efforts appear to be having minimal effect on mortgage rates. In addition, the Mortgage Bankers Association reports that mortgage applications fell by 11.9% last week, a further indication of the impact of the current economic situation on the housing market.
Despite this increase in mortgage rates, the current levels still remain historically low and remain competitive with those of other countries. While the rise in rates may put off some potential buyers, it is important to note that the current rates are still well below the national average of 3.77% a year ago and could offer significant savings when it comes to purchasing a house. As such, potential home buyers should take advantage of the current climate and review their options.
This article was contributed on Oct 21, 2023
