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Mortgage rates are currently at or near their lowest, but could go down further. Check out this mortgage interest rate forecast to learn more. (iStock)
With the coronavirus sending the United States into a recession and causing record unemployment, the Fed set benchmark interest rates close to zero to support the economy, pushing mortgage rates down. Now, homeowners and potential buyers want to know: what are the expected mortgage interest rates? Are rates falling more and is it worth the wait to get a better deal?
The mortgage rate trend has been a boon to homeowners and potential buyers. Current homeowners can potentially benefit from refinancing and can save significantly on their home loans. Anyone considering buying a home could also get a loan that’s more affordable than ever. While homeowners interested in additional savings may wish to take mortgage rate forecasts into account when making their decisions, many others will find that current rates are so low that it is not worth the risk of just waiting to see them. rate increase.
To decide what is best for you, it may help to explore the mortgage options available based on current rates. You can visit Credible to easily compare mortgages by rate and loan terms without affecting your credit.
What are the current mortgage rates?
Mortgage rates have already reached historic lows. In fact, the average weekly mortgage rates in the United States were 2.99% for a 30-year fixed rate loan; 2.54% for a 15-year fixed rate loan; and 2.91% for a five-year adjustable rate mortgage as of Aug. 20, according to Freddie Mac.
These rates come at the end of a long downward trend in mortgage rates, with rates around the same time last year at 3.55% for a 30-year fixed rate loan; 3.03% for a 15-year fixed rate loan; and 3.32% for a 5/1 arm. Mortgage interest rates have repeatedly broken new records as they continued to plunge this year in response to the economic fallout from COVID-19. To see what type of rate you are currently eligible for, enter your information into Credible’s free online tools.
HOW TO OBTAIN A MORTGAGE RATE LESS THAN 3%
And while Fannie Mae predicted in mid-July that mortgage rates would drop below 3.0% by the end of the year, that milestone has already been taken, with average rates crossing the 3 mark. % early August. Yet even though rates fell, real estate values remained largely stable, creating an unprecedented refinancing opportunity as well as the opportunity for well-qualified buyers to save substantially on their home loans.
If you want to take advantage of current refinance rates, use Credible to compare lenders and see how much you could save on your monthly payments.
WHY IT’S A GOOD IDEA TO REFIN YOUR MORTGAGE WHILE RATES ARE LOW
Will mortgage rates continue to fall?
Here are the mortgage rate forecasts for the remainder of 2020: Several major housing authorities have forecast mortgage rates to fall below 3% in August and that prediction has already come true. Those trends are unlikely to change anytime soon, which is why many of those same pundits believe rates will stay in the below 3% range through August.
(Based on current rates, it’s probably a good time for you to refinance. To see how much you could save on monthly payments today, calculate the numbers using Credible’s free online tool. .)
Even with today’s exceptionally low mortgage rates, there is in fact an unprecedented large gap between mortgage interest rates and 10-year Treasuries, although these normally move in sync. If mortgage rates were to follow past trends and this yield spread narrowed, mortgage rates would actually be even lower than they are now.
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However, while there is a real possibility that rates will fall further to bridge this unusually large gap between 10-year Treasury and mortgage rates, two factors could prevent this from happening.
1. Mortgage lenders are inundated with refinancing requests: Mortgage lenders are already seeing unprecedented refinancing demands and cannot handle the current volume, so there is little incentive to cut rates further. Lenders are also relying on investors to buy mortgage bonds at very low rates to keep consumer mortgage rates as low as possible – and there hasn’t been as much demand due to the rise in mortgage prices. stocks, as well as fear of defaults or foreclosures the economic fallout from COVID-19.
If the volume of lenders declines in the coming months, rates could fall further. And non-bank lenders could also pressure big domestic banks to start cutting rates, as big banks aim to prevent wholesale lenders with aggressive pricing from gaining market share.
2. The market is linked to investor sentiment: Recently, the question that concerns us the most is the response to the coronavirus. If great strides are made in the medical treatment of coronavirus cases, if a vaccine is developed, or if cases start to decline rather than climb, the trend could reverse and rates could rise.
The upcoming election could also have an impact on rates, which rose after the 2016 election due to markets predicting the Trump administration would be favorable to corporate interests.
THE MORTGAGE RATES ARE VERY LOW: GET THE BEST REFINANCE PRICE
Should you expect lower rates?
Those who wait for rates to fall further may see their strategy bear fruit, or may lose the opportunity to secure a mortgage at the current record low.
Potential borrowers who are unsure of how to proceed should visit Credible today to compare refinancing rates and current lenders.
HOW TO OBTAIN THE BEST MORTGAGE REFINANCE RATES
Remember to carefully review the terms, including mortgage points, mortgage origination fees, and interest rates. A better understanding of current loan offers could help in deciding to apply now or wait for the possibility of a better rate in the future.
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