Rising Mortgage Rates Means It’s Time To Buy A House
Homebuyers have been enjoying the fruits of low mortgage rates for all of 2021, but rates are going to steadily climb. The pandemic marked a time when housing was unstable, but now times are changing. For the past year, homeowners and buyers saw mortgage rates tumble to historic lows and then hover near there to this day. Unfortunately, it looks like this incredible real estate trend is coming to an end. All indications are that mortgage rates are going to start rising and will continue to rise through the end of this year. The team at Streamline Realty is here to give you the data regarding mortgage rates and what it means for homeowners and home buyers.
Why Mortgage Rates are Rising
Mortgage rates are expected to rise as we head into the next year. This is thanks to the economy recovering from the novel Coronavirus. It is expected that this rise won’t instantly happen tomorrow but will surely increase as we go through the year. Matthew Graham, Chief Operating Officer of Mortgage News Daily, writes that rates can easily change.
“Tomorrow could add to the good times or completely reverse them depending on how the market reacts to the Fed's tapering announcement. To be clear, this is a scheduled policy meeting/announcement for the Fed,” said Graham.
As of right now, mortgage rates have been at their highest in the past 2 weeks. However, this could still be considered a dramatic representation. The mortgage rates are not too far from the lowest rates in the past two weeks. The main importance of the increasing mortgage rate is that it could lead to higher upfront costs.
The rates have now risen as we go into the end of the year. Freddie Mac said that rates are bound to increase when they made a prediction in the summer. They noted that rates will rise this year, estimating a 30-year fixed budget rate of 3.4% by the end of 2021. Similarly, the Mortgage Bankers Association (MBA) also has reported an expected rise in mortgage rates. They expect it to rise from 3.6% in the 3rd quarter of 2021. These are large jumps. The jumps in percentage are not unexpected, but rather a natural cause of the economy coming back together. It’s wise to take advantage of the market now or get ready for the higher rates in the future.
Now, we are living in the reality of rising mortgage rates. The latest data by Freddie Mac tells us that the rates will have risen by 0.7 points. Homebuyers should be aware that mortgages are still low compared to previous years.
Why Low Mortgage Rates are Fantastic for Home Buyers and Homeowners
Low mortgage rates are great for homeowners and home buyers, alike. Lower mortgage rates can save you money on monthly payments. They can also save you tens of thousands of dollars over the life of your mortgage. For this reason, when rates are low, people want to buy homes. At the same time, when rates are low, homeowners want to refinance their existing mortgage at lower rates. You should absolutely take advantage of this market if you can. Changes in the future rate will require you to reassess how you budget which can result in not getting your dream home.
How Will Future Mortgage Rates Stack Up Historically?
The question of rising mortgage rates may be scary for some homebuyers. Some of you may feel regret about not refinancing your mortgage or capitalizing on that new dream home. However, there is no need to fear. The future is uncertain. We can’t tell if mortgage rates will ever go back down to what they are now, but they are still great rates.
Taking a look at the average historical mortgage rates offered by Freddie Mac, we can see why the marketplace is still great for homeowners. Mortgages were also hovering at historic lows in 2020, but they were not less than 3% for most of that year. Taking a look at the data, we see that the average rate was 3.11% for 2020. Even if we look at 2010, the average mortgage rate was a whole percentage up to 4.09%. When comparing the two, we can see that mortgage rates have historically been higher compared to the rates we have today.
Looking back even further reveals even higher rates. In the decade of the 2000s, the mortgage rate was sitting at an average of 6.29%. Going to the 1990s, the rate was averaging at 8.12%. In the 1980s the rate was even more. A percentage of 12.7% was the average. Mortgage rates are still historically low, and the rise of rates in 2021 and 2022 is nothing to worry about. This is great news, as mortgage rates will rise but still be affordable.
Final Thoughts
Even small increases in mortgage rates can add up to thousands of dollars. That’s why if you are thinking of buying a home, it is best to act now. Delaying your decision can cost you the opportunity to get lower monthly payments and big savings over the life of your home loan.
The best thing you can do is contact us. Our team can help you take advantage of today’s market and buy your dream house. At Streamline Realty we believe that everyone deserves the right to own a home, so we will do everything we can to help make your dream a reality.
While it is likely that today’s mortgage rates will be gone, tomorrow’s mortgage rates will still be favorable from a historic perspective. Remember, your average mortgage rate was over 12 percent during the 1980s. No matter what rate increases are in store for us this year, they will be a huge discount compared to previous years. So, while the window is closing for this year’s historic discounts, buying a home is still a viable option. It is still financially prudent to buy a house a few months down the road.
