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.
