With mortgage interest rates hitting record minimums so many times lately, some are wondering if we will see low rates continue through 2021, or if they will start to rise. Recently, Freddie Mac released his quarterly forecast, noting:
“The average 30-year fixed-rate mortgage has reached a record low more than twelve times in 2020 and the low interest rate environment will continue through this year. We expect interest rates to average below 3% by the end of 2021. Although this is a modest increase from mid-2020 levels, the Federal Reserve’s recent vote to keep interest rates close to zero should keep rates low. “
As shown in the graph below, Freddie Mac projects low rates ahead with modest growth that will last until 2022.Freddie Mac is not the only authority anticipating low tariffs with a slight increase. Fannie Mae, The Mortgage Bankers Association (MBA), and the National Association of Real Estate Agents (POMEGRANATE) also predicts low rates with a small increase over 2021 continues. Here is the quarterly breakdown of their projections and how they are expected to play over the next year:It’s important to note that, although a small change in interest rates can have a big impact on monthly mortgage payments, these rates are still incredibly low compared to where they were just a few years ago.
What does this mean for buyers?
Low mortgage rates create an outstanding opportunity for current homebuyers get more for their money by staying within their budget. As the economy strengthens and we recover from the challenges of 2020, it is natural that tariffs may rise in response to a healthier economy. Mark Fleming, Chief Economist at First American, reminds ni:
“Rising interest rates reduce home buying power and affordability, but is often a sign of a strong economy that increases home-buying demand. By any historical standard, today’s mortgage rates remain historically low and will continue to accelerate home-buying power and keep purchasing demand robust. “
With low rates provoking activity among hopeful buyers, there are many people who are highly motivated and looking for homes to buy now. In this environment, it can be challenge finding a home to buy, so a local real estate agent will be key to your success if you are also thinking of buying. Collaborating with a trusted real estate professional to navigate the process while rates favor you may be the best move you can make.
If you are willing to buy a house, it may be wise to make your move before mortgage rates begin. Let’s connect to discuss how today’s low rates can create more opportunities for you this year.
Content previously posted in Keep Current Things