Will Low Mortgage Rates Continue Throughout This Year?
Recently, there are many times that the mortgage interest rates are hitting record lows. Because of this, some are wondering if these low rates will continue throughout the year, or if they’ll start to rise. Freddie Mac released their latest quarterly forecast, noting:
“The average 30-year fixed-rate mortgage hit a record low over a dozen times in 2020 and the low-interest rate environment is projected to continue through this year. We expect interest rates to average below 3% through the end of 2021. While this is a modest rise from 2020 averages, the recent vote by the Federal Reserve to keep interest rates anchored near zero should keep rates low.”
The graph shows what Freddie Mac is projecting. Low rates are going forward with a modest rise that’s expected to continue through 2022. Freddie Mac isn’t the only authority anticipating low rates with a slight rise. Fannie Mae, The Mortgage Bankers Association (MBA), and the National Association of Realtors (NAR) also expected low rates with a small increase as 2021 continues on. Here’s the quarterly breakdown of their projections and how they’re expected to play out over the next year:
It’s important to remember that, while a small change in interest rates can have a substantial impact on monthly mortgage payments, these rates are still incredibly low compared to where they were just a couple of years ago.
How buyers must react to this?
The low mortgage rates are creating a great opportunity for current homebuyers to get more for their money without adjusting their budget. As the economy gets stronger and we recover from the challenges of 2020, it’s natural for rates to potentially rise in response to a healthier economy. Mark Fleming, Chief Economist at First American, reminds us:
“Rising interest rates reduce house-buying power and affordability, but are often a sign of a strong economy, which increases home buyer demand. By any historic standard, today’s mortgage rates remain historically low and will continue to boost house-buying power and keep purchase demand robust.”
With low rates fueling activity among hopeful buyers, there are a lot of people who are highly motivated and looking for homes to purchase in Southern California right now. In this environment, it can be challenging to find a home to buy, so a local real estate agent will be key to your success if you’re thinking of buying too. Working with a trusted real estate professional in Southern California to navigate the process while rates are in your favor might be the best move you can make.
If you’re ready to buy a home, it may be wise to make your move before mortgage rates begin to rise. Let’s connect to discuss how today’s low rates can create more opportunities for you this year.