The interest rate for the 30-year fixed-rate mortgage rose slightly this week to an average of 3.18%, inching even higher from its sub-3% average just a month ago. Still, by historical standards, mortgage rates remain low, and some buyers are in a rush to complete their home purchases ahead of any further increases.

“Although mortgage rates remain low, we are beginning to see a pullback by those looking to enter the housing market,” says Sam Khater, Freddie Mac’s chief economist. “In fact, homebuyer demand has gone from 25% above pre-COVID-19 levels at the start of the year, when mortgage rates hit record lows, to 8% above pre-COVID-19 levels today.”

Purchase demand, as reflected in mortgage applications, is also falling compared to late May and early June of 2020, when mortgage rates were at the same level, Khater says. “This is confirmation that while purchase demand remains strong, the marginal buyer is feeling the affordability squeeze resulting from the increases in mortgage rates and home prices we’ve experienced in recent months,” Khater adds.

Still, competition remains strong in the housing market as bidding wars grow more common. The National Association of REALTORS® released its Pending Home Sales Index on Wednesday, attributing a decrease in contract signings mostly to the lack of inventory and not lower buyer demand. Housing activity is expected to remain strong in 2021, but mortgage rates likely will continue to rise. However, they will remain at historical lows near 3.5%, according to NAR’s Economists’ Outlook blog.

• 30-year fixed-rate mortgages: averaged 3.18%, with an average 0.7 point, rising slightly from last week’s 3.17% average. Last year at this time, 30-year rates averaged 3.33%.
• 15-year fixed-rate mortgages: averaged 2.45%, with an average 0.6 point, unchanged from last week. A year ago, 15-year rates averaged 2.82%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.84%, with an average 0.3 point, also unchanged from last week. A year ago, 5-year ARMs averaged 3.40%.

Freddie Mac reports average commitment rates along with average fees and points to better reflect the total upfront cost of obtaining the mortgage.