Consumers are benefiting from historically low mortgage rates, but will interest rates remain so low? Find out how you can take advantage of 2% mortgage rates while they last. (iStock)
Last year, mortgage rates reached historic lows due to the ongoing coronavirus pandemic. In March 2020, the average rate for a 30-year mortgage began to fall, and continued to decline until the end of the year. In August, rates fell to less than 3% and, in December 2020, reached the historic low of 2.68%. Before last year, the lowest mortgage rate recorded was 3.35% in 2012.
With loan rates so low, issues surrounding the housing market have become inevitable. Many experts predict that mortgage rates will rise above 3% in 2021, but that would still be considered a very low rate. How can home buyers take advantage of these historically low rates? You can visit an online mortgage broker like Credible to compare rates, choose the term of the loan and obtain pre-approval from several lenders.
Could 2% mortgage rates be the new normal?
The US economy is slowly starting to recover from the pandemic, which has led many people to wonder if mortgage rates will remain low for the rest of 2021. Mortgage rates of 2% could be the new normal or interest rates increase with the beginning of the economy to recover?
Most market experts believe that their unlikely rates will remain at 2% for the rest of the year. Rates are already starting to drop to 3% for several reasons. Democrats in the House and Senate have indicated plans to pass additional stimulus measures to improve the economy. Assuming the economy continues to improve, the Fed may end current rate-cutting programs. The Fed’s decision affects mortgage rates and mortgage lenders. And mortgage rates may rise slightly due to fears of inflation. In short: if you want to buy a new home – or refinance your mortgage – now may be the best time to get the lowest mortgage payment.
When will mortgage rates go up?
According to Freddie Mac, 30-year mortgage rates are currently at 3.02%. This represents an increase of 2.65% in January. As you can see, mortgage rates are already starting to go up. But will low levels remain in mortgage rate forecasts?
It is impossible to know whether these record low rates will remain, so homeowners should look for opportunities to take advantage of them while they last. If rates go up a few percentage points, it may not seem like much, but it can add hundreds of dollars to your monthly mortgage payments.
Refinancing can be a great way to save money and shorten your mortgage terms. Refinancing rates are hovering around record lows. Of course, it depends on your credit history and current mortgage rates. If you are looking to refinance, using a loan market like Credible can make the process easier.
Should I refinance my mortgage now?
Since mortgage refinancing rates are so low, homeowners can save thousands of dollars on refinancing. You can use an online mortgage refinancing calculator to determine your new monthly costs and see how much you could save by refinancing.
There are many benefits of refinancing, including:
- Saving money on your monthly payments
- Reducing the total amount of interest you pay over the life of the loan
- Switching from an adjustable rate mortgage (ARM) to a fixed rate mortgage
- Lowering your mortgage terms so you can pay it off early
If you are interested in receiving prequalified fees without affecting your credit score, see Credible. After a brief application process, Credible will show you competitive rates from multiple lenders so you can see if refinancing is the right option for you.
Home owners making a new mortgage
Borrowers are currently enjoying 2% mortgage rates, so now is also an excellent time to consider refinancing. However, refinancing alone will not save you money – you need to choose the right lender. Many homeowners assume that they need to refinance with a local bank or credit union, but these are not the only options for refinancing their mortgage.
When refinancing, you are essentially replacing your current mortgage with a new loan. This means that you will have to pay closing costs, which vary between 3% and 6% of the total cost of the mortgage. And some lenders charge hefty fees, such as application fees, origination fees and prepayment penalties.
If you’re not careful, these rates can quickly increase and eliminate many of the cost-saving benefits of refinancing. The best way to explore your options is to visit Credible to compare rates and creditors.
The final result
30-year mortgage rates are currently hovering around historic lows, but may not remain as low forever. If you are considering refinancing your mortgage, now is an excellent time to start the process. Do some research and find out what kind of rates you can qualify for and make sure to compare offers from different lenders.
To learn more about mortgage refinancing, contact Credible. You can get in touch with experienced credit agents who can answer all your questions about mortgages.