Rates for purchase mortgages remain in historically low territory, but last week they inched a little bit higher.
The average rate for a 30-year fixed mortgage increased from 2.81 percent to 2.84 percent. Similarly, the rate on a 15-year fixed mortgage rose from 2.27 percent to 2.31 percent. Meanwhile, the rate on a 5/1 adjustable-rate mortgage (ARM) went up from 2.86 percent to 2.90 percent.
Rates are still near historic lows and there are many reasons for this. For starters, the Federal Reserve is maintaining its policy of strong accommodation. The Fed has recently indicated that it plans to keep short-term interest rates near zero for the foreseeable future. This, in turn, is helping to suppress long-term rates.
In addition, the current economic environment is also contributing to the low rate environment. The US economy is still facing challenges related to the coronavirus pandemic, and this is likely to continue for some time. As a result, bond yields are not expected to move significantly higher anytime soon.
Despite the higher rates, buyers continue to take advantage of the current environment by purchasing homes and securing low-interest mortgages. With the spring market heating up, buyers will likely continue to take advantage of the current environment in order to secure a great deal on a home purchase.
Mortgage rates have been on an upward trend since bottoming out in 2020. Last week alone, the average rate for a 30-year fixed rate mortgage rose from 2.81 percent to 2.84 percent and the 15-year fixed rate mortgage rose from 2.27 percent to 2.31 percent. The 5/1 adjustable-rate mortgage (ARM) rate was also up, increasing from 2.86 percent to 2.90 percent.
The Federal Reserve’s policy of strong accommodation is one of the main reasons for the current low mortgage rate environment. By keeping short-term interest rates near zero, the Fed is helping to suppress long-term rates, like those for mortgages. Additionally, the current economic difficulties caused by the coronavirus pandemic have also contributed to the low rate environment.
Despite the higher rates, buyers are still taking advantage of the historically low rates. The spring market is heating up, hinting at an increase in home purchases. Homebuyers are likely to continue to seek out great deals on mortgage rates and purchase homes as long as the rates remain below historic levels.
This article was contributed on Jul 21, 2023