Mortgage Predictions: Just how low can mortgage rates go and for how long?
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ll through 2020, mortgage rates remained low, setting new record lows in December and January of less than 3 percent. Since then, the mortgage rates have climbed setting a new trajectory for this year. However, the direction that trajectory will shift towards largely depends on inflation. One thing that is for sure, most experts agree that the rates will not remain at rock bottom, and might rise significantly to as high as 3.5% or even 4.25% before the year ends. The good news is that today, the mortgage rates are still low, which means that homebuyers can take advantage of this opportunity to buy now and lock in a great deal! IT’S NOT TOO LATE! As the economy begins to reopen, one thing is certain, that mortgage rates and refinance rates will begin to rise. That doesn’t however mean that one day we’ll wake up to find the rates sky-high. It is a gradual process. For instance, so far, the mortgage market has been marked by a gradual rise and fall of the mortgage rates to what we have now. That means that for those looking to buy their homes this year, there is still a pretty good chance to lock in exceptionally low rates. And while no one can predict with true certainty about the future of the mortgage rates, the general consensus is that there is a big likelihood that the mortgage rates might rise in 2021.
“Our long-term view for mortgage rates in 2021 is higher,” says Realtor.com chief economist Danielle Hale. “As the economic outlook strengthens, thanks to progress against coronavirus and vaccines plus a dose of stimulus from the government, this pushes up expectations for economic growth and inflation, driving long-term bond rates higher.” One of the key goals and a positive sign of a strong economic recovery is getting people back on track to work faster. To achieve this fast, the government has to speed up the vaccination process “Mortgage rates should rise as we are in the early stages of getting our economy working again,” says Logan Mohtashami, housing data analyst at HousingWire. However, the mortgage rates could remain relatively low if there is any unexpected bad news especially concerning the Covid-19 or even the vaccine distribution. Therefore, if the process of vaccination goes smoothly and there is a speedy recovery, we should expect the mortgage rates to start climbing.
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MORTGAGE RATE PREDICTIONS FOR 2021 Data from Freddie Mac shows that since the beginning of the year, the average 30-year fixed mortgage rate increased roughly 0.4 percent, and every sign points to the rate actually rising higher as we progress with the year. THE POWER IS NOW MAGAZINE | AUGUST 2021
