As of the end of last week, the average 30-year FRM rate is at 3.69%. It’s been steadily increasing since the historic lows of 2020. The ARM and 10-year Treasury Note rates also increased between January and February. Periods of historic lows followed by steady increases aren’t necessarily unexpected, though. That’s been the trend for at least the past three decades — ups and downs but a clear overall downward trend. Precipitous drops have tended to result in a period of reduced average. For the past decade it has averaged somewhere around 4%, but it’s unclear whether the sharp decline in 2019-2020 will result in a reduced average for the coming future.
What may prevent a reduced average is the Fed’s plans for the future. Their gradual reduction of purchases of mortgage-backed bonds (MBBs) has kept mortgage rates relatively stable. They will cease buying MBBs entirely in March, at which point they will begin increasing their benchmark rate throughout 2022. This is going to result in higher interest rates. With the rate already approaching 4%, the increasing rates will likely result in the average going above 4% and continuing the trend of the past decade.