For some time, we have been experiencing historically-low mortgage interest rates, currently below 3%. This has been an extraordinary time for homebuyers and everyone wonders how much longer rates will remain this low.

Many factors impact mortgage rates, including the economy, inflation, and Federal policies. The one metric that has held up over the last 50 years that affects mortgage rates is its relationship with the 10-year treasury rate, as shown in the graph below.

The point spread between these two rates has recently gone from the 50-year average spread of 1.7 points, to 1.53 points, indicating that mortgage rates may rise. Based on the surge in the 10-year treasury rate since October, as shown below, experts are forecasting an increase in mortgage rates as 2021 unfolds.

Expectations of faster economic recovery/growth and inflation continue to push treasury yields and mortgage rates higher.

Still, economic fundamentals point to rates remaining in the low 3% range for the year.

Whether you’re a first-time buyer or have purchased a home before, it's important to note that even the slightest percentage increase in mortgage rates can make a big financial difference over the life of the home loan.

It may make sense to buy now rather than wait.