US 30-year mortgage rates declined for the second straight week since their initial 2021 spike. According to Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 2.73 percent for the week ending January 28, 2021 (down from averaged 2.77 percent last week).
With last week’s data now in, US 30-year mortgage rates have hovered below 3 percent for six months and were close to the record low of 2.65 percent reached earlier this month. A year ago at this time, the 30-year FRM averaged 3.51 percent.
All other rates in the survey posted a drop or remained unchanged. The 15-year fixed-rate mortgage averaged 2.20 percent (down from last week when it averaged 2.21 percent) while the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.80 percent (unchanged from last week).
Over the past few months, the sharp drop in borrowing costs (and especially US 30-year mortgage rates) has supported the housing industry boosting both demand and prices. Latest reports confirmed that housing prices have gained traction since several months. One of the them, the FHFA (Federal Housing Finance Agency) purchase-only price index recently increased by the largest margin on record.
This trend is unlikely to change in the short term given that housing inventory is particularly low. The National Association of Realtors (NAR) highlighted that “total housing inventory at the end of December totaled 1.07 million units, down 16.4% from November and down 23% from one year ago (1.39 million). Unsold inventory sits at an all-time low 1.9-month supply at the current sales pace, down from 2.3 months in November and down from the 3.0-month figure recorded in December 2019.”