One year ago, the housing market was all about the suburban boom and urban exodus. Today, the real estate market continues to boom in the suburbs and countryside, but promises of more normalcy due to the vaccine rollout may be boosting urban areas. Forbes suggests that one year ago, many viewed urbanites’ move to less dense areas would be permanent, but many plan to return now that businesses and events are reopening. And the housing boom resulted primarily by plummeting mortgage rates, which went from 3.65% to 2.5% in February 2020. Vaccine rollout and easing of restrictions have pushed those record low rates up by 0.5%.
A rebounding economy and record government spending spell inflation, and that means higher rates. The average 30-year fixed is now at 3%, which is still a very low rate and has not had any impact on the purchase market.
On a $500,000 loan, the difference in the payment from 2.5% to 3% is $133 per month — a number that many homebuyers can absorb without impacting the home that they seek to purchase. Refinancing rates are slightly higher as most banks save their best rates for purchases and charge a premium for refinancing.