Mortgage rates hang near record lows to close 2020 – here’s the bad news

Mortgage rates closed in 2020 at the lowest levels recorded. But those who want to lock in this cheap financing should not wait too long on the sidelines.

The fixed-rate fixed-rate loan for 30 years averaged 2.67% for the week ending December 31, a base point of the new record low of 2.66% set the previous week, Freddie Mac FMCC,
Reported Thursday.

Meanwhile, the 15-year fixed-rate mortgage loan fell two basis points to an average of 2.17%, which was a record low for the mortgage product. The 5-year treasury-indexed hybrid adjustable rate bond fell by eight basis points to 2.71%.

“By the end of 2020, we can look back on a year in which low mortgage rates were a powerful fuel, boosting activity and giving buyers access to a home,” said George Ratiu, senior economist at

According to Freddie Mac’s weekly report, mortgage rates have fallen to record lows on more than a dozen separate occasions this year. The rates have indeed dropped to levels that were once considered unworkable, if not impossible.

But a number of factors could raise rates in the new year. “Compared to the approval of the newly approved COVID-19 bill, which has been on the market for months, the outcome of two Senate elections in Georgia and the possibility of more fiscal relief in the eyes of investors are much less certain. . and thus can cause sharp movements in the bond yields, depending on the outcomes, ”said Matthew Speakman, an economist at Zillow ZG.

Mortgage rates keep track of long-term returns, especially the 10-year treasury bond. “Until more is known on one of these fronts, significant movements in mortgage lending rates appear unlikely,” Speakman added.

In the long run, the trajectory of the pandemic and the economy will have a major impact on tariffs. With the vaccination of vaccines, it seems that the world community is ready to start coming out of the pandemic. If it benefits the US economy as expected, rates will definitely rise.

As a result, most economists have predicted a rate hike for 2021, no matter how much rates rise.

Either way, the rising mortgage rates threaten to make buying a home unaffordable at a time when house prices are rising by record amounts. “We expect rising mortgage rates to challenge first-time buyers who are still struggling to find an affordable home as stocks hit new lows and prices continue to rise,” Ratiu said.