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According to Freddie Mac, mortgage rates hit another all-time low this week, but don’t expect ultra-low rates to last forever.
The average 30-year fixed-rate mortgage rate was 2.65% for the week ending Jan. 7, 2021, a new low, according to the company’s weekly survey on mortgage rates. In a statement, Sam Khater, chief economist at the company, said recent low rates have been offset by rising house prices, which poses a challenge to the affordability of homes.
The affordability of housing emerged as a concern during the second half of 2020, as economists warned that the rapid rise in prices made it difficult for some potential buyers to enter the market, even amid rates historically low mortgages. High demand from buyers, probably driven in part by changes caused by the pandemic, as well as historically low interest rates and changing demographics, and the low supply of homes for sale have contributed to rising prices. fastest in recent years in October, the last month for which Case-Shiller index data are available.
But there could be more pressure on the scope of housing as mortgage rates rise, Khater wrote in the statement. The economist said he expects rates to rise modestly over 2021 as the economy recovers from the Covid-19 pandemic and vaccinations begin to take effect, Khater wrote in an email to De Barron. Although Khater noted that an increase in rates depends on the distribution of vaccines, he said rates are likely to increase slowly, with the largest increase in the second half of the year.
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