Home loan rates touched new record lows last week, as the year opened against the continuing backdrop of damage from the coronavirus pandemic on the U.S. and global economies — which suppressed rates through most of 2020.
Mortgage buyer Freddie Mac reported Thursday that the average rate on the benchmark 30-year fixed-rate home loan jumped to 2.79% from 2.65% last week. By contrast, the rate stood at 3.65% a year ago.
The average rate on 15-year fixed-rate loans, popular among homeowners seeking to refinance their mortgages, increased to 2.23% from 2.16%.
Long-term bond yields which can influence interest rates on mortgages and other consumer loans, are climbing this month amid expectations of higher U.S. government spending on pandemic relief and an economic recovery as more people get vaccinated for COVID-19.
The yield on the 10-year Treasury briefly hit 1.18% earlier this week. That’s up from less than 0.90% at the start of the year and the highest since last March. Yields rise when bond prices fall.
Economists forecast modest increases in mortgage rates this year. While that’s unlikely to derail the red-hot housing market, it could make it tougher for would-be homebuyers.