Mortgage rates hovered near their recent levels this week, and if you’re waiting for more drastic movements, experts say not to hold your breath.
Average rates on 30-year fixed-rate loans fell to 2.96% from 2.98% the week before, Freddie Mac said Thursday. That’s about three-tenths of a percentage point above the all-time low rate of 2.65% reached this January and two-tenths of a percentage point below the 3.18% average rate on April 1, the high for the year so far.
Meanwhile, rates for the same type of mortgage rose slightly, from 3.17% to 3.18% the week ending April 30, as tracked by the Mortgage Bankers Association. Forecasters don’t expect any big changes in the near future: Freddie Mac predicts the rate will rise to 3.2% by the second quarter and to 3.4% by the end of the year.
Low mortgage rates have helped fuel a residential real estate boom during the pandemic, to the point where supplies of reasonably priced homes for sale have nearly run dry. And industry insiders expect the borrower-friendly lending environment to persist for some time.
“I think interest rates are the number one contributor to buyer behavior,” said Nick Bailey, chief customer officer of Re/Max, noting that the Federal Reserve, whose monetary policy heavily influences borrowing costs, has signaled its determination to keep interest rates low through 2023. “I think they’re going to adjust a few basis points here and there. We might see them rise in the coming months, but not by much.”
That means the fast-and-furious market for housing sales is likely to continue for the time being, with depleted for-sale listings and buyers taking drastic measures to get the houses they want, like engaging in bidding wars and skipping home inspections. However, Bailey predicted that rising home prices would eventually drive enough entry-level buyers out of the market to bring supply and demand somewhat back into alignment and slow down the escalating price tags.