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The time of dreams
Mortgage rates hit another all-time high this week, according to Freddie Mac – 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 January 7, 2021, a new low, according to the company’s weekly mortgage rate survey. In a statement, Sam Khater, the company’s chief economist, said recent low rates were offset by rising house prices, causing housing affordability.
Housing affordability has emerged as a concern in the second half of 2020, as economists have warned that the rapid rise in prices makes it more difficult for potential buyers to enter the market, even amid historically low mortgage rates. The high demand from buyers, probably partly due to the changes caused by the pandemic, as well as low historical interest rates and demographic changes, as well as a low supply of homes for sale, have contributed to prices rising at the fastest pace in recent years. in October the last month for which Case-Shiller index data are available.
But additional pressure on housing affordability could rise as mortgage rates rise, Khater said in a statement. The economist said he expects rates to rise modestly throughout 2021 as the economy recovers from the Covid-19 pandemic and vaccinations begin to take effect, Khater wrote in an email to Barron’s. While Khater noted that an increase in rates depends on the distribution of vaccines, he said that rates are likely to increase slowly, with the largest increase in the second half of the year.
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