If you’re thinking about getting a mortgage, you may be worried that mortgage rates may rise in August after falling sharply since the start of the pandemic. The good news is that experts expect rates to stay at or near historic lows in August 2020.
“Mortgage rates are likely to remain at record lows until August and for the foreseeable future, given the weak economic background. The uncertain nature of the coronavirus and the likelihood of a long-term economic recovery will keep mortgage rates afloat,”
Mortgage rates continue to decline after the COVID-19 crisis, which began months ago. The average yield on the reference 30-year fixed-rate mortgage fell in the last week of July to a new record low of 3.30 percent, based on Bankrate’s weekly survey of major lenders. A year ago, the 30-year-old was 3.97 percent. The average annual 30-year flat rate for the week is 0.67 percentage points below the 52-week high of 3.97 percent.
Where do mortgage rates go in August?
The percentage is unlikely to increase or decrease much in the near future, professionals agree.
“While a slight daily change can be expected, there should be a slight change in the 30-year fixed interest rate in August. Continued demand for 10-year government securities – the anchor for long-term mortgage rates – will help keep interest rates moving. about plus or minus 3 percent, ”says Ken H. Johnson, a real estate economist at the Florida Atlantic University in Boca Raton, Florida.
Logan Mokhtashami, Orange County, California, a leading analyst at HousingWire, responded to these thoughts.
“The ten-year yield refuses to break below 0.62 percent at any rate,” Mokhtashami said. “But we have two factors that can lead to a reduction in the rate: if government disaster relief is not large enough and if some of the last economic gains are lost. In addition, if this second jump in coronavirus cases worsens, it will reduce the 10-year yield. “
In fact, the longer our nation passes without an effective vaccine against COVID-19, the more uncertain our economy becomes and the more likely it is that rates will remain flat or fall even more.
“How we deal with a pandemic will be a major factor in where mortgage rates go in the long run,” Johnson said. “With a combination of effective vaccines and treatment, the impact of the virus on the economy will be less and at all other equal levels, the percentages must remain stable.”
The upcoming elections may also change issues earlier than expected.
“I expect the 30-year rate to fall below 3 percent in August, as the choice of cycle will make traders nervous enough to see extra money flowing into bonds that will cut interest rates,” said Derek Egeberg, branch manager for Mortgage Academy in Yuma, Arizona. “I anticipate the percentages to remain lower until the end of the fourth quarter and until the profits for this year’s holiday season are taken into account and the election cycle is over.”
Mortgage rates after August
The Mortgage Bankers Association predicts that the 30-year flat rate should remain relatively unchanged over the next five months, averaging 3.3 percent in 2020 and reaching 3.5 percent in 2021. Freddie Mack expects the percentages to remain low and fall to an average of 3.4 percent this year and 3.2 percent in 2021. Meanwhile, Fannie Mae expects rates to fall to 3.0 percent in the third and fourth quarters of 2020 and fall up to 2.8 percent per year from now.
Forecasting for the rest of the year and 2021, McBride believes that the path of mortgage rates will be dictated by how economic tariffs, current stimulus measures from the Federal Reserve and the inflation forecast.
Act soon on a new mortgage or refinancing, the expert advises
Egeberg is convinced that now is the most ideal time to buy or refinance a home.
Similar to the question of our grandparents why they did not buy more homes 50 years ago, when prices were cheaper, our children will ask us about the “Great Interest Rate” of 2020 and whether we were able to take advantage of these historically low rates, “he says.” This is the biggest purchase opportunity of our lives because of how affordable debt payments are in the current interest rate environment. “
But before you rush into a decision, do your homework first; lubricate the numbers and ensure that you can afford the monthly payments.
“Instead of setting a time to buy a home based on low mortgage rates, it’s better to make sure your finances are in stable shape before you take the plunge,” says McBride. “Work on improving your credit rating, paying off debt and increasing savings. These steps will make you better prepared for successful home ownership, whether your rate is 2.5 percent or 3.5 percent. ”
Photo by Wolfgang Kahler / LightRocket via Getty Images.
Find out more:
Video: The Week Ahead: Key Unemployment Benefit (CNBC) Expires