The average 30-year fixed rate mortgage (FRM) rate declined slightly in the week ending May 7, 2021, to 2.96%. The average 15-year FRM rate also declined slightly to 2.30%. FRM rates recently rose from the record lows reached through the Federal Reserve’s (the Fed’s) efforts to stimulate lending during the ongoing recession. Beginning a little over a year ago in March 2020, the Fed dropped their benchmark interest rate to zero and began purchasing mortgage-backed securities (MBS), fulfilling their role as the lender of last resort to ensure mortgage originations continued during the onset of the recession, which continues today.

The Fed intends to keep their benchmark interest rate near zero through at least 2023, but mortgage rates have recently begun to increase as bond market investors show more interest in riskier, non-government investment opportunities. Also of note, the government’s continued stimulus injections are propping up the economy despite 2020’s historic job losses, half of which have yet to be regained here in California going into 2021. The housing market’s performance in 2021-2022 will very much depend on the amount and duration of further government intervention, including stimulus, extensions of the foreclosure moratorium and future job creation.

FRM rates are closely tied to the bond market, tending to move in tandem with the 10-year Treasury Note (T-Note) rate. The 10-year T-Note recently plunged to its lowest rate on record, but has since bounced back, at 1.54% as of May 7, 2021. In 2020, the expectation of a decline in business activity led bond market investors to seek the safety of Treasuries, accepting significantly lower yields in return for the safety of treasuries, which in turn pulled down FRM rates. Now, the only player to keep interest rates near the historic lows of 2020 will be the Fed, which may accomplish this task by amping up its MBS purchases.

The spread between the 10-year T-Note and 30-year FRM rate is 1.42% as of May 7, 2021, just below the historical difference of 1.5%. The higher margins seen through much of 2018-2020 signify that mortgage lenders had been padding their risk premiums on top of restricting mortgage credit. This spread has since shrunk, indicating lenders are unable to drop their mortgage rates further without further Fed intervention.

The average monthly rate on ARMs increased slightly to 2.80% in April 2021, well above its low point of 2.49% experienced in May 2013. While recent months have seen the average ARM rate consistently higher than the average 30-year FRM rate, the 30-year FRM rate rose above the average ARM rate beginning in February, making these riskier mortgage products more appealing. Therefore, ARM use may inch higher, even as the Fed works to keep interest rates on FRMs low. 

The 2020 recession, along with the impacts from the global pandemic, are being felt in the housing market. Social distancing has caused economic activity to spiral, resulting in lost jobs and less willingness to take on large purchases. Many homebuyers and sellers are hitting pause on their plans and while today’s low mortgage interest rates have thus far supported home prices, they aren’t enough to support transactional volume. Expect 2021 home sales volume to end the year below 2020, reversing course once a consistent recovery is underway, likely to begin around 2024.

Updated May 7, 2021. Original copy released March 2012.

Click the link to go directly to a chart, or browse the charts by scrolling below.

1. 30-year fixed rate mortgage (FRM) rate, weekly — Chart update 05/07/21
2. 30-year FRM rate, monthly — Chart update 04/30/21
3. 15-year FRM rate — Chart update 05/07/21
4. 5/1 adjustable rate mortgage (ARM) rate — Chart update 04/30/21
5. 10-year Treasury note rate — Chart update 05/07/21
6. Combined FRM and 10-year Treasury note rates — Chart update 04/30/21
7. 91-day Treasury bill rate — Chart update 04/16/21
8. 3-month Treasury bill — Chart update 05/07/21
9. 6-month Treasury bill — Chart update 05/07/21
10. Treasury Securities average yield — Chart update 04/23/21
11. 12-month Treasury average — Chart update 05/07/21
12. Cost of Funds Index — Chart update 04/23/21
13. London Inter-Bank Offered rate (LIBOR) — Chart update 04/16/21
14. Secured Overnight Financing Rate (SOFR) — Chart update 04/23/21
15. Applicable federal rates — Chart update 04/16/21

 

Chart update 05/07/21

Current
05/07/21
2.96%

Month ago
04/09/21
3.02%
Year ago
05/08/20
3.26%
The average 30-year FRM rate in California is provided by Bankrate.com.

Chart update 04/30/21
Apr 2021
Average
3.03%
Mar 2021
Average
3.08%
Apr 2020
Average
3.30%
 
 
Chart update 05/07/21
Current
05/07/21
2.30%
Month ago
04/09/21
2.42%
Year ago
05/08/20
2.73%
The average 15-year FRM rate in California is provided by Bankrate.com.
More information:

 
Chart update 04/30/21
Apr 2021
2.80%
Mar 2021
2.78%
Apr 2020
3.29%
The 5/1 average adjustable rate mortgage (ARM) rate shows the average rate for the first five years after origination. After the initial five-year period, the ARM rate is adjusted annually based on an index figure, such as a certain Treasury Bill rate (which reflects Federal Reserve rate movements) or the London Inter-Bank Offered Rate (LIBOR). Beginning January 2016, the average ARM rate in California is provided by Bankrate.com. Prior to January 2016, the average ARM rate is provided by Freddie Mac’s survey of the Western Region of the U.S.
Chart update 05/07/21
Current
05/07/21
1.54%
Month ago
04/09/21
1.68%
Year ago
05/08/20
0.66%
This rate is a leading indicator of the direction of future Freddie Mac rates. The 10-year rate historically runs closer to 4% during a stable money market. The rate is influenced by worldwide demand for the dollar and anticipated future domestic inflation.
 
 

Chart update 04/30/21
Avg 15-Year
Apr 2021
2.34%
Avg 30-Year
Apr 2021
3.03%
Avg 10-Year T-Note
Apr 2021
1.62%
The average 15- and 30-year conventional commitment rates are the rates at which a lender commits to lend mortgage money in the United States-West/California for the duration of the life of each respective mortgage as reported by Freddie Mac. The green line reflects the 10-Year Treasury Note Average, a leading indicator of the direction of future Freddie Mac rates. It is comprised of the level of worldwide demand for the dollar and anticipated future domestic inflation.
More information:

Chart update 04/16/21
Current
04/15/21
0.02%
Month Ago
03/18/21
0.03%
Year Ago
04/16/20
0.28%
This rate determines the minimum interest rate the seller must use in a delayed §1031 transaction and report when not receiving interest on §1031 monies held by a facilitator/accommodator. This rate also sets the amount of the ordinary income the facilitator/accommodator must report.
Chart update 05/07/21
Apr 2021
0.02%
Mar 2021
0.03%
Apr 2020
0.14%
The 3-Month Treasury Bill is the rate managed by the Federal Reserve through the Fed Funds Rate as the base price of borrowing money in the short-term. It is used in determining the yield spread, which predicts the likelihood of a recession one year forward. The posted rate is the monthly average for the listed month. Rates are released with a 1-2 month reporting delay.

Chart update 05/07/21
 Apr 2021
0.04%
Mar 2021
0.05%
Apr 2020
0.17%

The six-month T-Bill rate is one of several indices used by lenders to periodically adjust the adjustable rate mortgage (ARM) rate. The adjusted rate equals the indexed rate (at the time of adjustment or an average of several prior rates) plus the lender’s profit margin. The posted rate is the monthly average for the listed month. Rates are released with a 1-2 month reporting delay.

Chart update 03/26/21
Mar 2021
0.08%
Feb 2021
0.07%
Mar 2020
0.33%
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate.The ARM interest rate equals T-Bill yield, plus the lender’s profit margin. The index is an average of T-Bill yields with maturities adjusted to one year.

Chart update 05/07/21
Apr 2021
0.12%
Mar 2021
0.13%
Apr 2020
1.50%
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. This figure is an average of the one-year T-Bill rates for the past 12 months. The ARM interest rate equals the 12-Month Treasury Average yield plus the lender’s profit margin. There is a one-two month lag in data reporting for the 12-Month Treasury Average.
Chart update 04/23/21
Feb 2021
0.41%
Jan 2021
0.46%
Feb 2020
0.99%
This index is one of several indexes used by lenders to periodically adjust the interest rate on an ARM note. The ARM interest rate equals Cost of Funds Index, plus the lender’s profit margin. Current index reflects the cost of funds two months’ prior in the United States-West.
Chart update 04/23/21
04/23/21
0.01%
03/19/21
0.01%
04/24/20
0.04%
This index is one of several indices used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. It is taking over the LIBOR in 2021, which was found to be manipulated in the years leading up to the 2008 recession and financial crisis. The ARM interest rate equals the SOFR rate plus the lender’s profit margin. The rate is based on overnight borrowing in the U.S. Treasury repo market. The SOFR is produced in a transparent manner and is based on observable transactions, rather than models, and, unlike the LIBOR, is not dependent on bank estimates.
Chart update 04/16/21
1-Month
0.11%
6-Month
0.22%
1-Year
0.29%
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. The ARM interest rate equals the LIBOR rate plus the lender’s profit margin. The rate is set by the banks in London, England.

Chart update 04/16/21
Short (3 years or less)
May 2021
0.10%
Medium (3 to 9 years)
May 2021
0.81%
Long (9+ years)
May 2021
1.62%
These rates determine minimum interest yield reportable on carryback financing. The AFR category is determined by the carryback due date. Rates are for monthly payments, reported for the coming month.