Why rising mortgage rates are nothing to worry about
At the start of the pandemic, mortgage rates fell to historic lows. However, in the midst of the coronavirus vaccine rollout and businesses reopening, those record interest rates will rise again.
In fact, most of 2021 has seen an upward trend in mortgage rates so far, leaving many homebuyers wondering if it’s still possible to get a great rate on a home loan. Fortunately, the mortgage market is still in excellent shape – even for first-time homebuyers – compared to pre-pandemic times, which means mortgage refinances are still viable options for saving money. money on monthly payments.
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Here’s what you need to know about how current mortgage rates in the housing market should change before you begin the refinance process. If you’re ready to explore your loan options, visit Credible to compare rates and lenders in minutes.
What Factors Affect Mortgage Rates?
When discussing the various factors that affect current mortgage rates, there is none more important than the 10-year Treasury rate of return. Simply put, Treasuries are often viewed as safe investments because they are backed by the US government.
As such, they are considered an indicator of investor sentiment. When demand is high, it’s a sign that the economy is changing and investors are looking for a safe place to invest. When demand increases, rates of return fall because the government pays less for the bonds it sells.
Typically, the Treasury bond rate is very closely related to mortgage rates and can be used as an indicator of future interest rate developments and, by extension, when to refinance.
Other economic factors that can affect the way the Federal Reserve sets interest rates are the unemployment rate, the inflation rate, and current housing conditions. All of these factors combined make it easy to understand why interest rate hikes were seen as the economy began to recover.
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If you think the time may be right to refinance, use an online mortgage savings calculator to see how much you could save on your mortgage payment.
What will mortgage rates be for the remainder of 2021?
Now that you know more about how to forecast mortgage rates, it’s time to take a closer look at how they will develop in 2021. As the economy continues to recover and stabilize, they are likely to rise. short term. However, in the longer term, the The Federal Reserve announced that they intend to keep rates low until at least 2023.
“I tell buyers not to panic. A rate hike shouldn’t deter them [from refinancing] right now, says Beatrice De Jong, consumer trends expert at Opendoor. “Homebuyers have benefited from unusually low interest rates over the past few years. But, in the late 1990s seeing interest rates as high as 6% was average and it is important to remember that people in the 1990s were still buying homes, taking advantage of rising property values. houses.”
Yet despite the wise words of many experts, rising interest rates have led to a collapse in refinancing requests. According to the latest weekly survey from the Mortgage Bankers Association (MBA), the refinancing index fell 1% over the past week and is 18% lower than it was during the same week last year.
When you’re ready to refinance your mortgage, visit Credible to compare loan rates and lenders.
What you can do to get a great rate
Mortgage rates are expected to rise as the economy recovers. However, that doesn’t mean you can’t get decent refinance rates. In this case, it will be important to focus on personal finance methods to ensure that you can access a good interest rate.
COULD 2% MORTGAGE RATES BE THE NEW STANDARD?
Improving a bad credit score and building credit can help you get a lower rate, as people with higher credit scores often enjoy better rates compared to those with a higher credit score. lower. On the flip side, choosing a 15-year mortgage over a 30-year mortgage can also be advantageous, as mortgage lenders are often willing to offer you a lower rate in exchange for a faster repayment.
An online mortgage broker like Credible can help you get pre-approval letters and personalized rates without affecting your credit score.
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