Mortgage Rates Fall Back Back to Near 3%. Here’s Why They’re Headed Higher.
T
he average 30-year fixed mortgage rate fell back to almost 3% this past week—but lower rates might not last, according to Freddie Mac.
The average 30-year fixed rate mortgage was 3.04% for the week ended April 15, Freddie Mac said Thursday—the second week-over-week dip in a row and down from as high as 3.18% earlier this month.
Low rates have been one tailwind for the housing and refinance market throughout the pandemic. The average rate of a 30-year fixed rate mortgage hit as low as 2.65% in January before heading higher. Despite the increases, rates are still below their 10-year average of 4%.
The dip could be short-lived. In a release, Sam Khater, Freddie Mac’s chief economist, said he expects rates “to increase modestly for the remainder of this year” due to inflation. “The economy is improving on the demand side and on the supply side, a variety of goods and materials remain scarce,” he wrote. “As a result of this imbalance, pricing pressures are building and causing inflation to rise.”
Freddie Mac’s forecast, updated yesterday, foresees mortgage rates averaging 3.2% in the second quarter of 2021; 3.3% in the third quarter; and 3.4% in the fourth quarter. It says rates will climb into 2022, averaging 3.7% for the year.
The recent pullback in rates could be welcome news for homeowners considering a refinance. The dip in rates expanded the pool of high-quality refinance candidates by 2 million, to 13 million, according to a Black Knight release.