Happy New Year and Happy Housing Market! We are in for an interesting year for both buyers and refinancers.
In 2020, mortgage rates hit record lows 16 different times. It felt like the never-ending email blast, “Rates Drop Again!”. Many borrowers rushed to refinance while others waited on the sidelines to see what was going to happen with our economy in the midst of the pandemic. To end the year, we saw the rates drop to another record low with an average 30-year fixed-rate sitting at 2.66%.
As we enter into 2021, rates remain at the 2.66% level. The question is, how long will they stay there? Housing economists predict that rates will remain low for at least the first half of this year. Our world is still battling the pandemic and our economy will take a long time to recover. The Federal Reserve will not raise the Fed Funds Rate any time soon.
Consider the state of mortgage rates over the last 40 years: In the 1980s, 30-year mortgage rates averaged 12%; in the 1990s, they averaged 8%; in the 2000s, they averaged 6%; and in the 2010s, rates averaged around 4%. And today, we are trending towards an average of just 2% interest rates.
As a borrower, there are multiple ways you can take advantage of this current housing market.
Buyers you have more money to play with as low rates allow you to qualify for more house. Unfortunately, we are experiencing a seller’s market. There is unprecedented competition in the market and low inventory is plaguing many of the major metropolitan areas. The relief for buyers is that builders are starting more construction around the county. Also, home prices are not expected to rise as much as they did in 2020. The projected numbers from Freddie Mac show that home prices will rise only about 2.6% this year. 2020 saw a 5.5% rise in home prices. To get ahead of the game and be prepared, buyers need to get pre-approved. You will know your buying power after talking to a mortgage broker and be able to make fast decisions in this ever-changing market.
Refinancers you have an opportunity to have an interest rate in the 2s. This is unprecedented. If you refinanced at the beginning of 2020, it’s time to do it again. If you have been sitting on the sidelines, now is the time to jump in. With vaccines coming out and a new President entering office at the end of January, things could change. Talk to a us today about your current situation and we will see how much money we can save you each month.
Reach out to us today and we can start the conversation.