With the CDC recently revising its mask-wearing guidelines for fully vaccinated Americans, many are hoping the worst of the coronavirus is over. Mortgage applicants have benefited from the recent fall of the 30-year fixed benchmark. mortgage rate, including a drop below 3 percent at the end of April.
But those in the know are not convinced that these historically low rates can continue to move downward. In fact, many are predicting slightly higher rates in the coming weeks. For homeowners and home buyers, this can provide additional motivation to act faster and benefit from today’s low rates before further growth occurs.
Forecast mortgage rates for June
Earl Daryl Fairweather, chief economist at Redfin in Seattle, is skeptical that rates will drop anytime soon.
“I don’t think it can be assumed that we will see record low rates in the long term. FROM the number of vaccines is growing and the Biden administration preparing to invest in infrastructure, it seems that the economy could bounce back sooner than most of us expected, ”she says. “Bearing in mind that various factors may cause some uncertainty, we are probably looking at rates set at around 3.5 percent by the end of the year, with some normal ebb and flow along the way.”
Greg McBride, CFA, Chief Financial Analyst at Bankrate, reflects these reflections.
“We will see slightly higher rates in the coming weeks as the economy grows. But a lot of that is already reflected in the rate hike earlier this year, ”McBride says.
Also contributing to this forecast is Lawrence Yoon, chief economist at the National Association of Realtors.
“The rates in June will be slightly higher. Large federal budget deficits require increased borrowing at the expense of higher interest rates. And inflation is on the rise, which also requires higher rates to be charged because the money returned is less efficient, ”he says.
But not all professionals are convinced that rates will rise in the next 30 days.
“We are seeing a downward trend in mortgage rates on major residential buildings, and I expect this to continue through June, based on the Fed’s guidance that it will not make any changes to its policy at this time,” says Ralph. DiBunyara. founder of Home Qualified in New York.
Fortunately for potential home buyers and refinancing, experts do not anticipate a sharp increase in average home loan rates by the end of 2021.
“As long as economic expectations are met, which means a strong rebound and higher inflation, the risk will grow,” says McBride. “But given the much slower growth rates expected in 2022, this could trigger a pullback at some point in the second half of this year. In any case, I expect rates to remain in the 3 to 3.5 percent range for most of 2021. ”
DiBugnara envisions a temptingly lower range of rates between 2.875% and 3.25% for the remainder of 2021, while Fairweather and Yoon expect an average 30-year fixed rate to be 3.5% by the end of the year.
“Inflation has been and remains the biggest factor I look at, especially with the recent price hikes due to strong demand for FMCG products such as sawnwood. It is difficult to determine if other high-demand products will follow suit, which in turn could drive inflation and affect rates, ”adds Fairweather.
Federal law can always affect mortgage issues.
“If a bipartisan plan for infrastructure spending is adopted, that is, a smaller size with a smaller deficit, then mortgage rates can remain neutral,” Yun says.
Another possible impact on rates that should be considered is the state of external markets.
“As our economies are on a recovery path, we must remember that other countries are still trying to fight the virus and bounce back,” says Fairweather. “This means that global investors can start investing their money in seemingly safe US assets, and such a model could lead to lower rates in the long term.”
Reliable real estate authorities partly repeat these numerical forecasts: in their latest forecast Mortgage Bankers Association expects a 30-year fixed rating to average 3.7 percent by the end of 2021, up from 3.2 percent forecasts of both Fannie Mae as well as Freddie Mac…
Best advice: Funding or refinancing now if you’re ready
Unanimous opinion? It’s hard to imagine rates to fall much lower. This is why, if you are in a good financial position to finance a home purchase or refinance a mortgage, waiting longer to lock in an attractively affordable flat rate may not be in your best interest.
“This can be a great time to make a commitment and take advantage of the low rates, offering you the opportunity to put more money in your pocket that could go to repairs, groceries, savings or travel as the world reopens from the coronavirus,” says Fairweather. … “I think those who expect rates to be cut even lower will be disappointed as I believe rates will soon be reversed.”
DiBunyara sympathizes with this sentiment.
“Since interest rates are still close to historic lows or at their level, it makes more sense to buy or refinance now than in a year,” he says. “Housing prices are currently somewhat overpriced due to lack of inventory and high demand from buyers. For new buyers, buying property at the highest price makes your investment more risky; but because the rates are so low, this investment will still pay big dividends in the long run, as your home will still get more expensive over time and your payouts on this asset will be lower than usual. ”
McBride’s advice is similar.
“There is no reason to procrastinate if you expect to stay in your home for more than a few years to recoup the closing costs,” he says. “Keep in mind: if someone offered you today’s rates at this time last year, you would have jumped over it.”