During the first Thursday of March, Freddie Mac announced that their 30-year fixed interest rate rose to over 3% (3.02%) for the first time since last July.
This news dominated real estate headlines for two days, and new articles talking about the “negative impact” it may have on the housing market began appearing left and right. While the rise in rates may sound daunting or scary, we need to realize two things:
1. This bump-up should not have surprised anyone. Several professionals already projected the rates would go up slightly as we go through 2021.
2. Freddie Mac’s statement about the rate increasing wasn’t a shock:
“The rise in mortgage rates over the next couple months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”
Homebuyers would rather rates not rise at all, since this will cause their monthly mortgage payment to increase. Let’s put a 3.02% rate into perspective. Here are the Freddie Mac annual mortgage rates for the last five years:
• 2016: 3.65%
• 2017: 3.99%
• 2018: 4.54%
• 2019: 3.94%
• 2020: 3.11%
Even though 3.02% is not as great as the sub-3% rates that we saw over the last few weeks, it’s still very close to the all-time low. (2.66% in December 2020)
If we take a look at the interest rates from the last 50 years, we’ll find that today’s rate is really outstanding!
• 1970’s: 8.86%
• 1980’s: 12.7%
• 1990’s: 8.12%
• 2000’s: 6.29%
• 2010’s: 4.09%
If you missed out on buying a home while rates were at an all-time-low, you shouldn’t be too upset. Starting your homebuying journey now may still make more sense than waiting, especially if rates continue to rise this year.