Mortgage rates in los angeles california (2021)
Anthony A. Luna • May 3, 2021
Mortgage rates in los angeles california (2021)
Evolution of Mortgage Rates in the First Quarter of 2021
The mortgage rate trend is a key factor to account for both when buying a new home or when looking into real estate investment properties. Along with property prices, median income, and inflation rates, the mortgage rate trend will help determine the affordability of homes around the country.
One common mistake among home buyers is the tendency to focus solely on home prices, which have been steadily increasing since the Great Recession. Currently, in many areas home prices are at all-time highs. It's enough to spook potential buyers into waiting to make a purchase. But the reality is that while home prices have risen drastically over the last 30 years, the mortgage rate trend has actually done the opposite, cutting to less than half of what it was in the early 1990s.
A recent study showed that while home prices seem high, when adjusting for inflation the average mortgage payment in the United States is actually more affordable than it was 30 years ago. That’s because homebuyers underestimate the impact that low mortgage rates can have on their purchasing power, particularly at a time like now when rates are still historically low.
Mortgage Rate Trend in Q1 2021
The overall mortgage rate trend in the US had been on the decline since three decades ago when the average 30-year fixed-rate mortgage was more than 10%. Around 2016, rates began to increase again, but since the start of 2019 rates resumed their downward trend. Then, with the onset of the COVD-19 pandemic in early 2020, rates were sent to historical lows. In early January 2021, the average 30-year fixed-rate mortgage in the US dropped to as low as 2.86%, a new record low and the first time it ever dropped below 3%.
However, from that point forward rates began to climb. During a two-week period in February, rates went from just under 3% to around 3.23%. Rounding out the first quarter of 2021, mortgage rates ended at around 3.33%, having risen nearly half a percent over the three months. This was the largest increase in a single quarter since Q4 2016.
What will mortgage rates look like moving forward?
What does this mortgage rate trend from the first quarter of 2021 mean for rates moving forward? Will rates continue to steadily rise? The good news for low rates is that to start the second quarter of 2021, rates fell. After reaching nearly 3.4% in the first week of the quarter, rates quickly dropped back down to 3.2% or lower. Comparing early second quarter rates in 2021 to what they looked like the previous year, rates are actually lower now. In early April of 2020, rates were hovering just above 3.3%.
At this point, experts are still expecting that average 30-year fixed-rate mortgages will continue gradually increasing throughout 2021, with only occasional drops. The Home Buying Institute is forecasting that average rates will land around 3.6% by the end of the year, which means about the same increase that occurred over Q1 will be spread out across the remaining three quarters. Even if that forecast is accurate, or if rates climb even higher, it is important to keep them in perspective: despite rising rates in Q1 and predicted rising rates for the rest of the year, the average 30-year fixed-rate mortgage is still historically low.
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