Whether you’re considering buying your first home, moving to a new one, or refinancing an existing loan, mortgage interest rates may play a big role in your decision. Today, mortgage rates hit a record low during 2020, motivating some people to buy or refinance. However, if you aren’t able to get into the market now, you may wonder, “Will these low mortgage rates last?” If you fall into that category, here’s what you need to know.
COVID-19 and 2020 Mortgage Rates
The coronavirus did have an impact on mortgage interest rates in 2020. In June, they fell below 3 percent due to the effect of a previous Federal Reserve policy update and certain investor activity. The Fed was aiming to stabilize the economy, while investors sought out safe havens to protect them from market fluctuations and uncertainty.
Currently, the Fed rate is also sitting near zero and has been since March. That has also been keeping rates at or close to record lows.
Mortgage Rates in 2021
While it is impossible to predict exactly what mortgage rates will do, they will likely stay low during the early months of 2021. COVID-19 is still a concern, and that may not change until coronavirus vaccines begin safeguarding significant portions of the population and, ultimately, slow the spread.
Some experts believe that mortgage rates will stay near where they are now through the first half of 2021. The thought is that, beyond that point, economic conditions may improve. If that is the case, mortgage rates will rise during the latter half of the year.
But even if mortgage rates rise, they might not go up quickly. Many experts believe the rate could stay below 3.5 percent during 2021, which is still incredibly low in a historical sense.
How Long Will These Rates Last?
Overall, the existing economic climate means that rates will likely remain near today’s rates for several months, if not through mid-2021. After that, increases are possible if economic conditions improve.
However, the rise in interest rates will likely remain fairly slow. The United States may see near record lows for all of 2021, particularly if the Fed chooses not to revise its rates until 2022, as some experts predict as being likely.
Exactly what will happen depends on factors that can’t be fully predicted, such as the impact of the COVID-19 vaccines. With that in mind, if securing a low rate is your goal, it may be wise to act as quickly as possible, suggesting it doesn’t cause an undue hardship. That way, you can snag a near-record low rate before they begin to trend upward.
Are you taking advantage of low mortgage rates? Why or why not? Share your thoughts in the comments below.
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