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The Home Front
The bargain-rate mortgage boat may have hoisted anchor, leaving would-be home buyers and families seeking to refinance stranded on the shore.

7-Mar-21 – The porthole for borrowers hoping to lock in a record-low mortgage rate in the 2 percent range was effectively closed on March 4, when the interest rate on benchmark 30-year fixed home loans rose to 3.02 percent nationwide, as reported by Freddie Mac’s Primary Mortgage Market Survey.

Freddie Mac

“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points, and the impact on purchase demand has been noticeable,” noted Sam Khater, Freddie Mac’s chief economist. “While purchase activity remains high, it has cooled off over the last few weeks and is currently on par with early March 2020, prior to the pandemic.”

Thirty-year fixed mortgage interest rates ended 2020 at a rock-bottom 2.66 percent, the lowest level in the Freddie Mac survey history, which began in 1971. With home loan rates setting new record lows an amazing 16 times in 2020, thousands of first-time home buyers likely have smiles on their faces.

On December 31, 2020, lenders nationwide were charging an average of 2.17 percent on 15-year fixed loans. At the end of December 2019, the 30-year fixed mortgage rates averaged 3.72 percent, while 15-year fixed loans averaged 3.16 percent.

On March 4, 30-year fixed loans averaged 3.02 percent nationwide, up from 2.97 percent a week earlier. A year ago, 30-year fixed mortgages averaged 3.29 percent. Meanwhile, 15-year fixed home loans averaged 2.34 percent, unchanged from a week earlier. A year ago, the 15-year fixed mortgage averaged 2.79 percent.

On March 5, Gateway Capital Mortgage in Chicago was quoting 2.877 percent on 30-year loans and 2.375 percent on 15-year mortgages, reported RateSeeker.

The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.

Sam Khater

Khater (left) predicted that the rise in mortgage rates over the next couple of months is “likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”

Analysts said long-term mortgage rates are creeping higher because of rising interest rates on 10-year Treasury notes, which have recently skyrocketed to 1.5 percent from a shockingly low 0.54 percent during the depths of the pandemic.

Optimism about future economic growth, success of the COVID-19 vaccine, and worries about a rise in inflation after the federal government pumps another $1.9 trillion in stimulus funds into the economy also are pushing bond rates higher, experts say.

Fed chairman expects inflation to rally

Federal Reserve Chairman Jerome Powell (right) said he expects inflation to pick up in the coming months, but he did not expect that to alter the Fed’s record-low interest rate policies unless there is a full recovery in the nation’s job market.

Jerome Powell

Millions of American families took advantage of the record low rates in the fourth quarter of 2020, according to the U.S. Residential Property Mortgage Origination Report.

Some 3.51 million home and 2-to-4-flat apartment mortgages were originated in the quarter, up 48 percent from the fourth quarter of 2019. A total of 2.23 million of the loans valued at $666.8 billion were rolled over in refinance actions.