We’re experiencing historically low mortgage rates. But can this trend continue, or are rates about to rise? In this article, I talk about mortgage interest rates in the current marketplace, and where they might be heading into 2021 and beyond.

The average interest rate over the past fifty years is around seven point seven six percent, and with current rates under three percent, we are way below that average. Because of this, a huge number of home buyers are out there taking advantage of these remarkably low rates.

If you are looking to buy, now is a great time. With that said, there’s no guarantee that these rates will continue to remain this low.

There are many factors that influence mortgage rates. The overall health of the economy, the rate of inflation, Federal policy, among many other things, all have an effect on where mortgage rates stand. Because there are so many factors and potential catalysts that can have an effect on mortgage rates, making accurate predictions is extremely difficult.

With that said, there’s one metric that has held up, more or less, over the past fifty years. That is the relationship between mortgage rates and the ten-year treasury rate.

As you can see, those two lines have moved in a fairly consistent pattern over time, albeit not identical, and the average spread between the two sits around one point seven percent. Now of course, there is some wiggle room here, and the spread isn’t always one point seven percent.

But because of this historically consistent relationship, some forecasters are projecting an increase in mortgage rates as we move throughout the year. Why is this exactly?

Between October of twenty twenty and today, the ten year treasury rate has moved up from point six eight percent to around one point two nine percent. This makes the current spread between the ten year treasury and thirty year mortgage rate at one point five three percent.

Based on this, there is still room for mortgage rates to rise in order to reach that one point seven percent average that we have seen historically.

Freddie Mac came out with their quarterly forecast, noting. “The average 30-year fixed rate mortgage hit a record low over a dozen times in twenty twenty and the low interest rate environment is projected to continue through this year.”

So although rates are projected to increase a bit throughout twenty twenty-one and twenty twenty-two, rates are going to remain at historically low levels. In fact, four major authorities agree with this assessment.

In addition to Freddie Mac, Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors all anticipate low rates with a modest increase over the next four quarters. Although it is true that even a small change in interest rates can have a substantial impact on monthly payments, these rates are still incredibly low compared to just a few years ago.

So what does this mean moving forward? Like I said at the beginning, nobody really knows for sure. But a lot of people who are much smarter than me seem to think rates are going to go up, at least a little bit in the near future. So if you were thinking about making a move this year, you probably shouldn’t wait much longer.