Mortgage rates are currently at or near record lows, but they could fall further. Check out this mortgage rate forecast to learn more. (iStock)
With coronavirus sending the US into a recession and causing record unemployment, the Fed set benchmark interest rates close to zero to support the economy – leading to a fall in mortgage rates. Now homeowners and potential buyers want to know: What is the forecast of the mortgage rate? Will rates drop further and is it worth the wait to score an even better deal?
The trend of mortgage lending has been an advantage for homeowners and home buyers. Current homeowners can potentially benefit from refinancing and can save substantially on their home equity. Anyone considering buying a home could also potentially secure a more affordable loan than ever before. While these homeowners who are interested in further savings will want to anticipate mortgage foreclosure predictions when making their decisions, many others will find that today’s rates are so low, it’s not worth waiting for rates alone. to increase.
To decide what is best for you, it may be helpful to research your mortgage options based on today’s rates. You can try Credible to easily compare mortgages with rates and loan terms without affecting your credit.
What are today’s mortgage rates?
Mortgage rates are already historically low. In fact, the US weekly average mortgage rates 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 mortgage with an adjustable rate as of Aug. 20, according to Freddie Mac.
These rates come at the tail end of a long downward mortgage rate trend, with rates at 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 rates have broken new records several times as they continued to post this year in response to the economic fallout from COVID-19. To see what types of rates you are currently eligible for, plug your information into Credible’s free online tool.
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And although Fannie Mae suggested in mid-July that mortgage rates would fall below 3.0% by the end of the year, that milestone had already been reached when average rates broke the 3% barrier in early August. However, even as rates tumbled, values for real estate remained largely stable, creating an unusual opportunity for refinancing as an opportunity for well-qualified buyers to save substantially on their home mortgages.
If you want to take advantage of current refinancing rates, use Credible to compare lenders and see just how much you can save on your monthly payments.
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Will mortgage rates continue to fall?
Here is the forecast for mortgages for the rest of 2020: Several major household authorities have projected that mortgage rates will fall below 3% in August and this prediction has already come true. These trends are unlikely to change any time soon, so many of the same experts think that rates will remain in the sub-3% range throughout the month of August.
(Given the current rates, it’s probably a good time for you to refinance. To see how much you can save today on monthly payments, crunch the numbers with Credible’s free online tool.)
Even with exceptionally low mortgage rates today, there is actually an unusually large gap between mortgage rates and the 10-year Treasury Bonds – even though these normally move in lockstep. If mortgage rates followed past trends and this share of yields was limited, mortgage rates would actually be even lower than now.
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While there is a real possibility that rates could fall further to close that unusually large gap between the 10-year Treasury and mortgage rates, there are two factors that could prevent this.
1. Mortgage lenders are removed with refinancing applications: Mortgage lenders are already seeing unusual requests for refinancing and cannot process the current volume, so they do not have much incentive to further reduce rates. Lenders also rely on investors to buy mortgages at very low rates to raise consumer mortgage rates – and there has not been as much demand due to rising stock prices, as well as fears of defaults or denial due to the economic fallout from COVID. 19.
As the volume of lending becomes easier in the coming months, rates could fall further. And non-bank lenders could also put pressure on large national banks to start lowering rates, as the big banks aim to prevent high-yielding lenders with aggressive pricing from gaining market share.
2. The market is bound to investor sentiment: Finally, the issue is at the top of the answer to the coronavirus. When major steps in medical treatment of coronavirus cases are reached, when a vaccine is developed, or when cases begin to fall instead of spike, the trend may reverse and rates may increase.
The upcoming election may also affect rates, which went up after the 2016 election by brands that the Trump administration predicts would be friendly to business interests.
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Do you have to wait for lower rates?
Those waiting for rates to fall further could earn their strategy to pay, or could lose out on the chance of securing a mortgage at the current record lows.
Potential lenders who are unsure about how to proceed should visit Credible today to compare current refinancing rates and lenders.
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Be sure to look carefully at terms including mortgage rates, mortgage-backed mortgages, and interest rates. More insight into current loan offers could help drive a decision to adapt now or wait for the possibility of a better rate in the future.
