April 26th, 2020 10:31 AM by Jackie A. Graves, President
Mortgage rates could
be on a roller coaster ride over the next year, with the coming months looking
to be particularly significant. In Fannie Mae’s Housing Forecast report,
economists predict that the average 30-year fixed-rate mortgage for 2020 will
drop to 3%, and then fall to 2.9% by 2021. Both would be all-time lows.
owners with strong credit seeking to buy could see rates in the mid- or even
low 2% levels, the mortgage industry predicts. “This would make buying or
refinancing possible for many who can’t afford it right now,” according to The
Mortgage Reports. A 2.9% mortgage rate instead of a 3.9% rate could raise
homebuying power by $36,000.
lowest average mortgage rate on record currently is 3.29%, which was set in
March of this year amid COVID-19 fears, according to Freddie Mac. Mortgage
rates have remained near historical lows ever since.
ago, mortgage rates averaged 4%. Homeowners and potential buyers can save
thousands of dollars over the life of the loan from the drop in rates. For
example, The Mortgage Reports uses an example of a $200,000 loan amount with a
4% versus 2.9% 30-year fixed-rate mortgage. Home buyers could potentially save
$121 a month and $44,000 over the life of the loan.
“With a full
year of record low mortgage rates, many homeowners would be able to refinance,
reducing their monthly payments and overall loan interest,” according to The
Mortgage Reports. “And prospective home buyers might be able to afford a house
sooner than they thought—or buy a more expensive home than they’d be able to
afford if rates were higher.”
borrowing costs could help with housing affordability. Even with a slowdown
likely in the housing market due to COVID-19, Fannie Mae economists are still
predicting existing home prices to increase by 2.5% between 2019 and 2021.
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