Mortgage rates won’t go back to 3% anytime soon: Real estate expert

If you’re a U.S. homebuyer waiting for a return to super-low mortgage rates, don’t hold your breath.

The short-lived era of 3% interest rates for 30-year fixed mortgages is over, and unlikely to return anytime soon — perhaps for decades — says Lawrence Yun, chief economist at the National Association of Realtors.

“One can never truly predict the future, but I don’t see mortgage rates returning back to the 3% range in the remainder of my lifetime,” he says.

That’s because average 30-year fixed mortgage rates of 3% or less were an anomaly related to the pandemic, lasting from about July 2020 to Nov. 2022. Historically, the rates have been closer to an average of 7% over the past 50 years, according to Freddie Mac data.

Why super-low mortgage rates won’t return any time soon

I don’t see mortgage rates returning back to the 3% range in the remainder of my lifetime.

Lawrence Yun

Chief economist at the National Association of Realtors

As a result of inflation and current federal spending deficits, Yun doesn’t think the Fed is likely to drop interest rates down to nearly 0% again, even in the event of another financial market panic or pandemic.

Other economists who spoke to CNBC Make It agree that homebuyers shouldn’t expect a return to record-low mortgage rates in the near term.

“It’s unlikely that the Federal Reserve will respond with the same breadth and aggressiveness like it did in 2020, as the very low mortgage rates in 2020 were caused by very unique circumstances” related to the pandemic, says Abbey Omodunbi, senior economist at PNC Financial Services.

“I haven’t seen mortgages that low in over 30 years in the business,” says Dottie Herman, vice chair at Douglas Elliman.It’s highly unlikely we’ll see rates that low anytime soon.”

Where mortgage rates are headed

The current average mortgage rate for a 30-year fixed-rate mortgage is 6.81% as of July 6, slightly lower than its November peak of 7.08%, per Freddie Mac data.

However, many projections are expecting a steady decline over the next year or so.

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