With the CDC recently revising its guidelines on how to wear masks for fully vaccinated Americans, many are hoping the worst of the coronavirus is behind us. Mortgage seekers have benefited from recent drops in the established 30-year benchmark Mortgage rates, including a drop below 3 percent in late April.
However, those in the know aren’t sure whether these historically low interest rates can continue their downward trend. In fact, many are predicting slightly higher rates in the coming weeks. For homeowners and home buyers on the fence, this can be additional motivation to act sooner and take advantage of today’s low rates before any further increases occur.
Forecast mortgage rates in June
Count Daryl Fairweather, chief economist at Redfin in Seattle, is one of the skeptics that interest rates are about to fall.
“I don’t think we can assume that we will see record lows in the long run. With the growing vaccine numbers And Biden’s government is preparing to invest in infrastructure. It seems like the economy is getting back to normal sooner than most of us expected, ”she says. “Given that various factors can create uncertainty, we are likely to expect interest rates to hover around 3.5 percent by the end of the year, with some normal ebbs and flows along the way.”
Greg McBride, CFA, Bankrate’s chief financial analyst, echoes these considerations.
“We’ll see slightly higher interest rates in the coming weeks as the economy warms up. Much of that is already reflected in the rise in interest rates earlier this year, ”says McBride.
Lawrence Yun, chief economist of the National Association of Realtors, is also looking at this prediction.
“The prices in June will be slightly higher. Large federal budget deficits require higher borrowing as higher interest rates are offered. And inflation is rising, which also requires higher fees as the money returned is less strong, ”he says.
But not every professional is convinced that prices will rise in the next 30 days.
“We have seen a trend towards a decline in primary home mortgage rates and I expect it will continue through June based on guidance from the Fed that it will not make any policy changes at this time,” says Ralph DiBugnara . Founder of Home Qualified in New York City.
Fortunately for potential home buyers and refinancers, the experts don’t expect the average home loan interest rates to rise dramatically by the end of 2021.
“As long as economic expectations change – which means a strong rebound and spike in inflation – the risk will be up,” says McBride. “But with a much slower pace of growth expected in 2022, that could trigger a pullback sometime in the second half of this year. Either way, I expect interest rates to stay in the 3 to 3.5 percent range for most of 2021. “
DiBugnara has a temptingly lower interest rate range between 2.875 and 3.25 percent for the remainder of 2021, while Fairweather and Yun expect an average 30-year interest rate of 3.5 percent by the end of the year.
“Inflation was and is the biggest factor I have in mind here, especially given the recent price hikes in the high demand for common goods like sawn timber. It is difficult to determine if other high-demand goods will catch up, which in turn could cause inflation to rise and affect rates, ”added Fairweather.
Federal legislation always has the potential to influence mortgage matters as well.
“If a bipartisan infrastructure spending plan is passed that means smaller size with less deficit, mortgage rates may remain neutral,” says Yun.
Another possible influence on the interest rates to be considered is the state of the foreign markets.
“With our economy recovering, we have to keep in mind that other countries are still struggling to fight off the virus and recover,” says Fairweather. “That means global investors may be putting their money in seemingly safe American assets and that pattern could lead to lower interest rates in the long run.”
Trustworthy real estate authorities reflect these numerical projections in some way: in their most recent forecast, the Mortgage Bankers Association expects a fixed 30-year rating averaging 3.7 percent for the remainder of 2021, compared to 3.2 percent forecasts from both Fannie Mae and Freddie Mac.
Best advice: fund now or refinance when you’re ready
The consensus opinion? It’s hard to see rates falling much lower. If you are in a healthy financial position to finance a home purchase or mortgage refinance, it may not be in your best interests to wait any longer for an attractively affordable fixed rate.
“This could be a great time to take advantage of low prices to give you the opportunity to put more money in your pocket that can be used for renovations, groceries, savings or travel when the world reopens from coronavirus” says Fairweather. “For those who are waiting for rates to fall any further, they will likely be disappointed as I believe rates will soon be going in the opposite direction.”
DiBugnara is sympathetic to this feeling.
“With interest rates still close to or at historic lows, it makes more sense to buy or refiate now than in a year,” he says. “Real estate prices are currently a bit excessive due to a lack of stocks and high demand from buyers. For new buyers, buying a property at a maximum value is riskier for your investment. But because the interest rates are so low, this investment will still pay off in the long run, as your home should still increase in value over time and your payments for that asset will be lower than normal. “
McBride’s advice is similar.
“There’s no need to hesitate as long as you plan on staying in your home for more than a few years so you can offset the closing costs,” he says. “Remember, if someone had offered you today’s prices around this time last year, you would have skipped over them.”