For the second straight week the mortgage rate has stayed steady at 2.73% as recent data shows that inflation remains well below the Federal Reserve’s 2.0% target. Inflation doesn’t have a direct impact on mortgage rates; however rising inflation could lead to higher bond yields. Given that the 10-year Treasury yield is the basis for mortgage rates, this also translates into higher mortgage rates.
The Census recently showed almost 2.3 million people moved during the pandemic, which is a 350,000 increase from 2019. We definitely saw that impact around La Plata County, with housing prices rising due to higher demand. NAR estimates 42% of renters can afford to buy and with low interest rates renters are starting to make the leap from renting to owning. It will be interesting to see how this affects the Durango area with the average sale price sitting at $586,729.
NAR is forecasting the 30-year mortgage rate to average 3.0% for the first half of 2021. This is due to employment and inflation picking up. With the vaccine becoming more available and businesses reopening the unemployment rate will decrease. This could be the boost our economy is looking for which will in turn increase prices, therefore raising the mortgage rates slightly. As always if you would like more information on mortgage rates or help navigating all things real estate, the Durango Team is happy to help.