Historically low mortgage rates are a big motivator for
homebuyers right now. In 2020 alone, rates hit new record-lows 16 times, and
the trend continued into the early part of this year. Many hopeful homebuyers
are now wondering if they should put their plans on hold and wait for the
lowest rates imaginable. However, the reality is, acting sooner rather than
later may be the actual win if you’re ready to buy a home.
According to Greg McBride, Chief Financial Analyst for
Bankrate:
“As vaccines become more widely available and a return to
normal starts to come into view, we’ll see mortgage rates bounce off the record
lows.”
While only a slight increase in mortgage rates is projected
for 2021, some experts believe they will start to rise. Over the past week, for
example, the average mortgage rate ticked up slightly, reaching 2.79%. This is
still incredibly low compared to the trends we’ve seen over time. According to Freddie
Mac:
“Borrowers are smart to take advantage of these low rates
now and will certainly benefit as a result.”
Here’s why.
As mortgage rates rise, the increase impacts the overall
cost of purchasing a home. The higher the rate, the higher your monthly
mortgage payment, especially as home prices rise too. Sam Khater, Chief
Economist at Freddie Mac, says:
“The forces behind the drop in rates have been shifting
over the last few months and rates are poised to rise modestly this year. The
combination of rising mortgage rates and increasing home prices will accelerate
the decline in affordability and further squeeze potential homebuyers during
the spring home sales season.”
What does this mean for buyers?
Right now, the inventory of houses for sale is also at a
historic low, making it more challenging than normal to find a home to buy in
many areas. As more buyers hit the market in the typically busy spring buying
season, it may become even harder to find a home in the coming months. With
this in mind, Len Keifer, Deputy Chief Economist for Freddie Mac, recommends
taking advantage of both low mortgage rates and the opportunity to buy:
“If you’ve found a home that fits your needs at a price
you can afford, it might be better to act now rather than wait for future rate
declines that may never come and a future that likely holds very tight
inventory.”
Bottom Line
While today’s low mortgage rates provide great opportunities
for homebuyers, we may not see them stick around forever. If you’re ready to
buy a home, let’s connect so you can take advantage of what today’s market has
to offer.
Source: Real Estate with Keeping Current Matters