How Long Will Interest Rates Stay Low?
It’s normal for mortgage rates to move up and down each week, and even from day to day. With continued strong demand from home buyers, there is stronger influences pushing mortgage rates up than those that could potentially drive rates down.
For mortgage rates to fall a notable measure, it would take something like a resurgence of COVID cases, a major decrease in home buyer demand, or an astonishingly bad economic report. None of which looks likely to happen in the near future.
So far this year, mortgage rates have lingered around 3 percent, inspiring hopeful homebuyers to jump into the market. However, there is always a good chance rates could increase later in the year and into 2022, making home loans more expensive.
The good news is, even when interest rates do rise, experts are not expecting considerably higher rates. Which means home buyers and homeowners looking to refinance could experience the same affordable financing that we’ve seen so far.
The Chief Economist with the National Association of Realtors (NAR), Lawrence Yun said “In 2021, I think rates will be similar or modestly higher . . . mortgage rates will continue to be historically favorable.”
Freddie Mac predicts that mortgage rates will rise through the end of next year and estimates the 30-year fixed mortgage rate will average 3.4 percent in the fourth quarter of 2021, increasing to 3.8 percent in the fourth quarter of 2022.
Mortgage rates have remained at historic lows for a long time now. Since Freddie Mac started tracking mortgage interest rates in 1972, the average mortgage rate for a 30-year loan has been around 8 percent. By comparison, current mortgage rates start around 3 percent (APR) for a 30-year fixed-rate mortgage.
Nobody knows how long mortgage interest rates will remain near 3 percent, but eventually rates will start to increase. Only time will tell how much, and how they will increase over time.
If you’re planning to buy a home, purchasing before mortgage interest rates rise can help you save significantly over the life of your home loan.
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