“Mortgage rates jumped this week as a result of positive news about a COVID-19 vaccine.”
In 2020, buyers got a big boost in the housing market as mortgage rates dropped throughout the year. According to Freddie Mac, rates hit all-time lows 12 times this year, dipping below 3% for the first time ever while making buying a home more and more attractive as the year progressed (See graph below):When you continually hear how rates are hitting record lows, you may be wondering: Are they going to keep falling? Should I wait until they get even lower?
The Challenge with Waiting
The challenge with waiting is that you can easily miss this optimal window of time and then end up paying more in the long run. Last week, mortgage rates ticked up slightly. Sam Khater, Chief Economist at Freddie Mac, explains:
“Mortgage rates jumped this week as a result of positive news about a COVID-19 vaccine. Despite this rise, mortgage rates remain about a percentage point below a year ago.”
While rates are still lower today than they were one year ago, as the economy continues to get stronger and the pandemic is resolved, there’s a very good chance interest rates will rise again. Several top institutions in the real estate industry are projecting an increase in mortgage rates over the next four quarters (See chart below):If you’re planning to wait until next year or later, Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), forecasts mortgage rates will begin to steadily rise:As a buyer, you need to decide if waiting makes financial sense for you.
If you’re planning to buy a home and want to take advantage of today’s low rates, now is the time to do so. Don’t assume they’re going to stay this low forever.
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Despite what you’ve heard, experts say home prices won’t fall in most markets. They’ll just appreciate more moderately.
Today, data shows buyer demand is moderating in the wake of higher mortgage rates.
While buyer demand is softening due to higher mortgage rates, homes that are priced right are still selling fast. That means your window of opportunity to list your house hasn’t closed.
It’s only natural for concerns to creep in that it could be a repeat of what took place in 2008. Today’s market is nothing like that.
While mortgage rates are higher than they were at the start of the year and home prices are rising, you shouldn’t put your plans on hold based solely on market factors.
The housing market is still strong; it’s just easing off from the unsustainable frenzy it saw during the height of the pandemic.