WASHINGTON (AP) – U.S. long-term mortgage rates have risen this week, but still remain close to historic lows as the pandemic-affected economy struggles to recover, with more Americans being vaccinated against the coronavirus.
Mortgage buyer Freddie Mac reported on Thursday that the average rate on the 30-year fixed-rate mortgage loan increased to 2.97% from 2.81% last week. In contrast, the reference rate was 3.45% a year ago.
The average rate on 15-year fixed-rate loans, popular with those looking to refinance their mortgages, rose from 2.21% to 2.34% last week.
While economists expect modest increases in home loan rates this year, they are likely to remain low, while the Federal Reserve keeps interest rates close to zero until the economy recovers.
Record-low loan rates helped push buyers into the housing market. The government reported on Wednesday that demand for new homes increased 4.3% in January, confirming that the housing market remains one of the strongest sectors of the US economy. But the lack of home supply, which was pushing prices up even before the pandemic hit last March, left many potential buyers empty-handed.
The number of Americans applying for unemployment benefits fell dramatically last week, in a sign that layoffs may have decreased, although claims for benefits remain at a historically high level. Claims for unemployment benefits decreased by 111,000 the previous week to 730,000 seasonally adjusted, the Department of Labor reported on Thursday. The latest figures coincide with a weakened labor market, which has made little progress in the past three months.