Mortgage interest rates continue to stay low and steady as the American economy slogs forward with its recovery during the pandemic. Now, it's more likely that rates will stay that way for a little bit longer after a dismal jobs report released by the Labor department earlier this month. The good news is that this is giving potential homebuyers a little more time to house hunt and find a good option in the midst of skyrocketing home prices.

The latest average from Freddie Mac on a 30-year fixed-rate mortgage held around 2.88%. Rates haven't gone above 3% on average since we briefly went to 3.02% in June 2021. In fact, you would have to go back to June 2020 to find the last time that mortgage interest rates on a 30-year fixed-rate mortgage averaged higher than 3.2% (according to data from Freddie Mac). Rates last touched 4% on average in May 2019. (8It is very important to remember that the interest rate you receive for your mortgage loan can vary based on a multitude of factors including but not limited to loan type and credit score.)

That being said, home prices continue to climb higher than ever—18.6% higher than a year ago according to the latest S&P CoreLogic Case-Shiller National Home Price Index. That's reflected in data from the National Association of Realtors, which shows a 59.1% annual increase in the sale of homes with a price tag of $1 million and higher.

The spread of the COVID-19 Delta variant is a huge factor in the economic recovery or lack thereof. Freddie Mac analysts note, "the wave of new COVID cases has led to weaker employment, lower spending and declining consumer confidence." Similarly, the Federal Reserve's Beige Book released this month noted "The deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions."

However, it's important to keep in mind that it's not a matter of if mortgage rates start to rise but when. The Fed is already contemplating tapering its $120 billion of monthly bond purchases, which it initially started in March 2020 in order to buoy the housing market and the economy at the onset of the pandemic. Once the Fed starts to pull back on bond purchases, interest rates are likely to rise. 

Mike Fratantoni, Senior Vice President and Chief Economist for the Mortgage Bankers Association, said in their weekly release, “Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates.” 

Overall mortgage applications are down according to the MBA. The last week of data released shows an 18% annual decline in purchase applications and a 4% year-over-year decline in refinance applications.